Procurement teams often face challenges as they grow and evolve as most organisations focus solely on savings. However, in a digitally connected world, procurement is now becoming a more strategic department, though savings are still important. While procurement teams mature, they fall under one of the following five stages.
Stage 1: Clear understanding of all spend categories
A procurement team should have a clear and precise understanding of spend across all categories throughout the organisation. The team should know what the organisation is buying and who they are buying from. Proper analysis of different spend categories and suppliers will allow procurement to figure out where the business is overspending.
Stage 2: Spend control
Once procurement identifies the spend categories and knows where the business is spending too much, it is time to bring about changes to ensure spend control. It could involve renegotiating contracts with suppliers, creating a database of preferred suppliers, and restricting buying permissions of non-procurement staff. This will enable procurement to control the spend and bring about savings.
Stage 3: Optimising efficiencies through proper usage of resources
The focus here is on optimising the usage of resources and ensuring procurement efficiency. Digitisation and automation are the keys to freeing up staff from mundane and repetitive administrative tasks so that they can do other tasks that add value to the organisation.
Stage 4: Maximising savings
Here, the focus is on maximising savings that procurement may have missed due to poor supplier management. Procurement teams can make use of technology for optimal supplier management so that they can track supplier transactions and performance.
Stage 5: Creating value for stakeholders
The emphasis is now on providing flexible services to internal stakeholders and customers. If customers get deliveries on time and as per their expectations, they will be happy with the company and keep returning for more.
Similarly, if internal stakeholders can depend on procurement to buy quality products on time, they will be happy and satisfied with the efficiency of procurement. When all parties are happy, procurement has reached the zenith of the procurement maturity curve.