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By
Business Management Review | Sunday, March 27, 2022
The goals of a world-class procurement organization move far beyond the traditional belief that procurement's primary role is to obtain goods and services in response to internal needs.
Fremont, CA: To understand how procurement's role is changing, we must understand what purchasing is all about, starting with the primary objectives of a world-class purchasing organization.
Goal 1: Operational Support Requirements
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Supporting this flow requires purchasing to:
• Understand business requirements
• Buy products and services
• At the right price
• From the right source
• At the correct specification that meets users' needs
• In the right quantity
• For delivery at the appropriate time
• To the right internal customer
Internal customers of purchasing incorporate:
• Manufacturing
• Physical distribution centers
• Engineering & technical groups
• Research and development
• Information technology
• Transportation and other services
Goal 2: Manage the Procurement Process and the Supply Base Efficiently and Effectively
To handle the procurement process and supply base competently, procurement must follow the following main steps:
• Identify opportunities
• Manage internal operations
• Accomplish objectives
Distinguish opportunities where the procurement team adds true value:
• Evaluation and selection of suppliers
• All purchases should go over the approved procurement processes
• Engineering and other functional inputs are elements of this process
• Sales personnel should not be permitted to enter contractual agreements without procurement's involvement
• Rising use of sourcing teams
• Review of specifications or statement of work
• Review the needs for the material or service being provided
• May be able to suggest similar alternative materials that can save the organization money
• Periodic monitoring of requisitions can allow greater leveraging of requirements
• Acting as the primary contact with the supplier
• Determining the method of awarding contracts
• Managing the supply base
• Current suppliers are competitive
• Recognition of new potential suppliers and develop relationships
• Improvement and development of existing non-competitive suppliers
Manage its internal operations efficaciously, including:
• Management of procurement staff
• Developing and maintenance of policies and processes
• Introducing and leveraging proper technology and systems
• Defining procurement strategy and structure
• Developing plans and measures
• Offering procurement leadership to the organization
• Offering professional training and growth opportunities for employees
Achieve this objective through :
• The leadership of procurement for the organization
• Sourcing management
• Ownership and accountability for sourcing processes
• Communication of purpose, process, and pay off
• Collaboration and partnering
• Teamwork
Goal 3: Support Organizational Goals and Objectives
Develop integrated purchasing strategies that support organizational strategies.
Effective purchasing strategies involve:
• Monitoring supply markets and trends (e.g., material price increases, shortages, changes in suppliers) and interpreting the impact of these trends on company strategies
• Identifying the critical materials and services necessary to support company strategies in key performance areas, particularly during new product development
• Developing supply options and contingency plans that support company plans
• Supporting the organization's demand for a diverse and globally competitive supply base
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