Many businesses employ “reactive procurement”, where buyers simply react to the needs of its internal customers with some pressure to reduce costs or some tactical procurement may take place which accomplishes short term gains.
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Smart and successful businesses employ Strategic Procurement where the buying team, processes and culture encourages proactive purchasing; the buying team being in harmony with the needs of the business, resulting in the purchasing strategy being aligned with the corporate strategy and therefore focussed on delivering the corporate goals.
Just as the business will have a Corporate Plan so should Procurement. It is essential that the Procurement strategy is aligned with the corporate strategy. Identify the key actions for the department during the year. This would normally include projects, commercial targets including cost reduction and improving the KPI’s for suppliers and stockholding.
The whole process should be documented as a process map such that the whole process is visible to key employees and other interested parties such as ERP developers and quality auditors.
A competent Procurement team is essential to apply Procurement Best Practice, to realise the significant benefits and to contribute to the success of the business. Competent procurement teams do not grow on trees; they are developed, trained, mentored and valued.
To make maximum use of the purchasing power in the business we need an extensive purchasing toolbox and expert hands on the tools