Despite serious trending challenges in the business environment, Procurement functions constitute a critical part of supply chain management.
Procurement leaders are thus mandated to cultivate value in the procurement function.
Looking at the Procurement Function as:
-a process of translating customer requirements into a selection of highly capable suppliers and to timely, accurately, cost-effectively delivery of high quality, mission critical inputs/goods and raw materials to internal customers.
-a process including assuring the accurate receipt and timely payment of all accrued invoices
and looking at“Value”as having the below 3 vital components:
-All activities in an organization are done right the first time.
-There is a physical transformation of inputs from one stage to another to useful products and services.
-The customers (end users) are willing to pay for the said outputs.
The great benefit of Cultivating Procurement Value lies in the following areas:
1) Meticulous and obsessive Understanding of Customer Requirements:
This is the most critical aspect of the procurement function, as it is the foundation of the function itself. Procurement leaders must understand and align their activities to customer requirements and value creation. Procurement Department Performance Metrics must also be aligned to customer requirements. This alignment ensures customer loyalty and profitability. Does your functions metrics matter to the customers and end users?
2)Alignment with stakeholder and strategic business:
Procurement leadership must assure the alignment of their processes, activities and metrics to their respective corporate objectives. Special care must be taken to understand, collaborate and support the interests and goals of key business stakeholders. Synergies must be identified, leveraged and shaped into effective business models. The realization of these synergies can create tremendous value for businesses if they are aligned with customer requirements. As procurement function have you identified your stakeholder and do you have a stakeholder management plan as part of strategy and not out of crisis?
3)Effective Cost Reduction Mechanisms and Best Practices:
Utilizing a robust Annual Strategic Buying Plan is the most critical element of cost-effective processes. Essential elements of a good buying plan are, alignment to corporate strategy, stakeholder buy-in to the plan, supplier performance management, total cost of ownership tracking, risk management processes, robust innovative technology and benchmarking. Do you have a procurement plan?are they aligned to best practice?how do you measure and track cost savings? Is your department currently engaged in an active cost saving strategy?
4)Assurance of the Ontime and InFull Delivery of High-Quality goods and services:
Continuous and timely acquisition of inputs to be converted into useful products and services is the fundamental purpose or mission of the procurement function. Failure to rise to this challenge will spell certain doom and loss of value and respect for procurement departments. Not to mention hampered operations.
How and how often do you measure OTIF? Where a complex supply network exists is OTIF measured for top 20% of vendors who account for 80% of deliveries and supplies?
5)A Culture of Continuous Improvement:
A powerful method to cultivate procurement value. All aspects of procurement systems must be continuously monitored and improved. This means that the technology, processes, skills sets, workflows, metrics, suppliers, must be defined, evaluated, analyzed, improved continuously. What continuos improvement plan are you engaged in?
6) The rise of Artificial Intelligence, Robotics andBlockchain
These are all technology that can be leveraged to realize procurement value. How are you exploiting these?
7)Ethical and Green Sourcing
Procurement leaders can add even greater value if they assure that all the goods and services procured, are Eco-Friendly and derived from *Socially Responsible means.* Do you have a sustainable procurement plan?
masmic 
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