Success Tips for Procurement Executives

The procurement role is having a bigger influence on the strategic plans of large businesses over time, guiding decisions that yield immense value. As a result, companies continue to entrust more of their fundamental challenges and opportunities to the procurement department. With an eye to the future, procurement executives are embracing their new roles and developing strategies to advance the field further.

One of the clear methods with which procurement leaders can enhance their critical work is through good succession planning. Here are three tips to identifying and grooming your successor.

1. Develop Criteria 

First, it is important to employ one or more useful metrics to find your successor. Longevity is a classic example. The successor needs to be at the right stage in his or her career. Any candidate should have accrued significant work experience, allowing that person to hone his or her decision-making skills. Additionally, while harder to assess beforehand, expected longevity within the new position is certainly important. The new person will likely take some time to adjust fully to the new position and understand the nuances of the business. If the successor is only there for a short time without a chance to prove loyalty, the value of your hard succession-planning work is in jeopardy.

While it is important for successors to share your vision for the company, it is also useful for the successors to have an independent streak. Creative thinking allows them to thrive in the new position and potentially present new approaches to continue to improve the procurement vision.

2. Bring Them Up to Speed

Once successors are identified, train them in the key technical languages for your company, specifically financial and legal. Understanding how to liaise with the CFO and legal team will allow successors to easily streamline the procurement process. Successors will know how and when to work with these entities, so they can better align their strategy with the corporate vision. Inter-departmental disagreements are likely to decrease as a result. But when disagreements do occur, successors will know how to address them professionally.

3. Keep Your Team Updated

Keeping your team informed throughout the transition may be equally as important as the transition itself. A strong team that is behind their new leader will positively impact the work of that new leader. If the hire is in house, an appropriate strategy is to have the successor become a team leader on several projects before the change is announced. Allow the rest of the staff to buy into the leadership and skills of this person. If the person is an external hire, make sure to sell him or her to your procurement team first.

There will likely be reservations or hard feelings toward the new hire, which is understandable. Talk about their feats outside of your business, and stress how the successor can apply these strengths to improve the department and improve team dynamics.

4. Ensuring a Successful Transition

With the procurement role becoming increasingly critical to overall business success, it is more important than ever that executives ensure successful transitions. Adopting these strategies will help procurement executives successfully identify and groom their successors.

Transformed procurement into a linchpin of an enterprise

Authored by: Usama Shahid  

Many top companies has transformed their procurement operations in profound ways to become a real strength of their company.

On the other hand many procurement departments are still struggling to adapt with strategic innovation strategies and to become strong pillar for their companies, Mainly because they remain trapped in the circle of old traditional procurement.

Working with leading organizations as procurement consultants, we have experienced that leading organizations are always ready to adapt with new strategies according to their industry challenge and achieve the future milestone that will make them leader in respective industry. This challenge adoption approach has makes these companies the best.

Convincing Supplier to Embrace eSourcing

eSourcing – or the process of tendering via the Internet is yet a concern in terms of managing supplier relationships. In the beginning of eSourcing, the concept was resisted by suppliers. They were aggravated by the thought that they shall get beaten-up over prices. Wise organizations communicated the advantages of esourcing to supplier. Here are some advantages which can help buyer to persuade suppliers to take part in esourcing bidding events:

1.     Improved transparency and delivering a clear framework can help companies understand supplier`s culture and how a company shall market their goods/services.

2.     Buying companies` mission, vision and values describes in RFP or eAuction benefits suppliers to understand company goals which helps to determine whether to do business with the buying organization.

3.     Communicating contract and product specifications, terms and delivery requirements take time for buyer to create a formal RFP and eAuction process which enables suppliers to prepare better for negotiation and contracting procedure.

Cost Reduction in Purchasing

 

Authored by Khizar Farooq

 

A detailed overview of expenditures is crucial to effective procurement. By looking at all the aspects affecting the prices of your products, you will be able to identify where costs can be cut.

Generally, the purchasing department’s goals are similar to those of anyone who buys something: Get the best possible quality of all supplies, services and equipment at the lowest cost. Most often, the purchasing department is that part of the procurement section that handles the supply chain process. To ensure quality and to prevent unethical practices, purchasing is usually separate from receiving and accounts payable.

How to become world class procurement organization

World-class procurement organizations outperform their peers by striving to providing unique value beyond cost reduction, including becoming a trusted advisor to the business, driving supplier innovation, and focusing on risk management.

 

Trusted Advisor - World-class procurement organizations are much more likely than typical ones to be considered valued partners by the business, not gatekeepers or administrators. The Hackett Group’s research shows that they have a high level of involvement in planning and budgeting half the time, nearly 4x more often than at typical companies. To achieve this status, world-class procurement organizations make certain to proactively understand what drives the requirements of the business as opposed to simply facilitating the buying process. This makes it possible to reverse-engineer costs and explore potentially less expensive and/or higher-quality alternatives.

Properly align and staff the supply chain organization

It can be difficult to organize the supply chain function in a way that will maximize its effectiveness and bring commensurate benefits to the company. Some companies are best served by embedding proficient supply chain management professionals in various business units. For others, a more centralized operation is most effective. Many of the progressive companies we have worked with, however, have adopted a hybrid approach that combines a centralized strategy to gain consensus with decentralized execution  to improve service.

3 Easy Steps to Support Cost Reduction Efforts

Managing costs with limited resources poses a particularly difficult challenge to corporate procurement leaders. The more resource-constrained a procurement department, the more likely it is that the overall business may be sensitive to cost. However, a lack of procurement resources can make it even more difficult to achieve tangible cost savings, given shrinking buying power, inability to invest in spend analytics, or for other reasons.

Here are three suggestions to help those who find themselves in such circumstances:

Efficient Supplier Discovery and Enhanced Procurement Speed

In modern competitive enterprises, the role of procurement is rapidly evolving. Once a function dedicated to cost and purchasing management, procurement is now a key strategic player with a broad value plan. Concurrently as procurement's potential is growing, their processes – especially those for discovering and qualifying suppliers – need to develop as well. There is a shift toward less tangible metrics in procurement function, such as contribution to strategy, advancement, joint effort, and integration. Procurement is looked upon to lead sourcing actions that recognizes the best in class suppliers of goods and services. All of the procedures and solutions procurement utilizes must leverage the full abilities of their supply accomplices.

Considering the change being found in the part of procurement, the accentuation must be on discovering suppliers that can fulfill prerequisites beyond cost savings - without adding time to the supplier discovery process. The requirement for a very effective procurement operation is acute, where suppliers perform as trusted accomplices due to the immense specialized nature of the supply chain and the pressure for opportune delivery. Subsequently, an escalated process for identifying suppliers that fit customized and very much characterized needs is critical. This pressure may have the secondary impact of bringing on task groups to abbreviate the supplier discovery process, yielding aggregate effect for simply keeping the procedure moving. 

During the supplier discovery process, other departments and internal stakeholders expect to be communicated by procurement executives. Friction between these departments is often caused due to lack of knowledge to choose the right supplier at right time, which creates inefficiency throughout the system. When internal stakeholders trust procurement's supplier discovery process, they have less incentive to put their own effort. Such duplication of efforts can create confusion about which suppliers are best to meet their needs and take internal stakeholders away from their primary responsibilities.

What makes such coordinated effort possible, is having executive level purchase in and support. Open channels of correspondence and full visibility guarantee that supplier connections are established in accordance with overarching company objectives, and resulting engagements will more expected to be of commensurate worth to the company. Cooperation with all levels of management is increasingly significant because of the huge pools of spend procurement teams have responsibility for influencing.

Notwithstanding to top-down support, procurement can better meet expectancy by creating strong strategies around the sources of information that rise their speed and guarantee creation of maximum worth. One means to that end will be greater usage of technology to facilitate supplier discovery. On-demand access to data on suppliers could vastly enhance procurement efforts, since processes which used to take weeks could be accomplished in a matter of minutes.

It is in a company's best interests to have an efficient procurement process. This not only saves time, it also to guarantees that suppliers are selected for their contributions to operating effectiveness, diversity, and innovation. Procurement will continue to be essential to a company's success as it is uniquely positioned to cut a company's costs and, more importantly, create value through the supply base. Investing in those abilities – and the technology that supports them – will ensure that procurement performance and impact continue to grow in line with the needs of the organization as a whole.

Easy way to reduce procurement cost by building relationship

Managing procurement spend with inadequate procurement process and limited resources is a hard task and tough challenge for procurement experts. The more competence, resourceful and equipped procurement department is, the more likely it for procurement department to provide better results to overall business. However, a lack of procurement resources can make it even more difficult to achieve tangible cost savings, given shrinking buying power, inability to invest in spend analytics, or for other reasons.

As an procurement official looking to build such connections, start by taking an ideal opportunity to understand functions of different offices, and imparting your enthusiasm for making life easy and more efficient, as by not only concentrating on cost saving mission. In the event that you concentrate on finding out about the work of other departments, and look to facilitate the obtainment encounter, the savings will come automatically.

Other departments may be reluctant to provide information or support to procurement by having a fear to lose control over relationships with vendor or decrease the quality of product and services. To overcome these fears, procurement leaders need to find a way to build relationships of trust with their executive colleagues outside of procurement.

Enhancing god terms among all organization departments provides another great benefit, once you have a strong rapport within the company, it is increasingly likely that you will gain insight into potential economies that were not otherwise obvious to you. By observing spends of different categories to find opportunities of major spend or other major element that can increase organization sourcing and bring cost saving for your company.

A lack of resources or incompetence in procurement processes may lead procurement department towards frustration as they do not have enough resources to produce require results on what they are planning to and this will also add more hurdles to an already challenging arena. However, by leveraging internal and external relationships creatively, today’s procurement leaders may have more opportunities for cost savings than they realize.

Pro Active budget Management a lead to success

When I am questioned about some information in reference to difficult circumstance confronted by supply chain division, two of my initial inquiries are: are you truly in compliance with best practices followed by supply chain departments and have you done an opportunity evaluation and the related business case?

It's that season of developing financial plan for your company. The time when dreams about accomplishing new and staggering results are dashed against the cool reality of the planning process in most companies. How to get around that cruel reality?

One path is to pick a couple of specific initiatives, acquire benchmarks of what is conceivable (from topic specialists who have done this on multiple occasions), estimate the required assets expected to take care of business, and incorporate this bottoms-up methodology in your financial plan demand.

Based on some case studies that our clients have had employing Strategic Sourcing & Supply Chain sourcing modules, sourcing teams  are able achieve these below mentioned cost reductions:

• 15 to 35% cost reduction in in supplies cost.

• Achieve timely delivery.

• 100% better transparency.

Another, more vital methodology, is to organize a present state evaluation, consolidated with an open door appraisal and business case for a complete change of your acquirement and store network exercises. The convincing motivation to seek after this methodology is that you regularly can position this, forthright, as a multi-year duty to a multi-year program that incorporates for all intents and purposes all that you have to end up world-class.

When supported by experienced advisors, the deliverable is a significant Return on Investment (ROI) while enhancing capabilities of the organization to deliver future results on its own.

When you HAVE done those fundamentals, you are likely to see senior management understand – and get excited about – what you can deliver for the future of your organization.

In conclusion, don’t let the conventional budget process constrain your ability to add real value to your organization. 

Challenges in 2016 for Procurement Departments - Part 2

Strategies the Right processes which suites the culture of company:

As the matter of business growth, so does the procedure of processing. Time is cash. Speed in delivering results is force. From starting supplier contracts to final accounts payable, viable procurement procedures can accelerate the whole purchasing exchange—across markets, organizations, and boundaries. The faster and all the more efficiently a business can prepare production network knowledge and transactions, the more competitive it can become. If it can connect the transaction to the finance department, competitive advantage can only increase.

Here are some points which should be consider while establishing and implementing the best processes to get maximum indirect spend under management:

• Target 85 percent spend under management
• Tightly integrate your sourcing and procurement organizations
• Analyze and benchmark indirect spend
• Increase the frequency of sourcing events
• Assign dedicated teams to run sourcing events
• Assign dedicated contract and supplier management teams
• Identify key internal stakeholders and develop good working relationships

Deploy the right technology and start gaining the savings and efficiency:

Today, it is the purchaser, not the supplier, who decides long haul business achievement. Knowing where, when and how to purchase effectively, and productively, gives upper hand. Acquirement experts need to react instantly to economic situations keeping in mind the end goal to ensure organization interests. Innovation can highly affect proficiency, visibility and enhancing processes, and sourcing and procurement methodologies have been enormously improved by advancements around there.

Consider these idea starters around giving impactful innovation technology to work:

• Create a team and process to explore available technology
• Explore promising technologies such as spend analytics, eSourcing, and tail-end spend management
• End-to-end integration between technologies and sourcing and procurement teams is critical
• Support integration with dashboard technology
• The priority is the bottom line: be able to identify savings and impact

Agenda for procurement success:

Procurement can, and should, make a huge effect in success of any association. A strategy and road map must be devised for indirect spend under management under control, and core to that is having the right people, processes and technology in place. By putting resources into the right place, tapping specialize devices to accomplish greatest results and taking an integrated approach with regards to procedures, procurement can achieve its objectives and demonstrate its value to success.

Challenges in 2016 for Procurement Departments - Part 1

Unlocking the procurement savings—and really making them stick—is a real test for every procurement department, building a road map to the right people, processes and technology is the answer to that challenge.

In actual, procurement team are leaving millions of dollars on the table, and subsequently, it's regularly asked how savings can be measured. As a fact, organizations don't know overspending is going on, not to mention how much. Circuitous spend commonly speaks to 20-30 percent of incomes, but automated procurement process and practices can save 10-30 percent on spend.

Procure-to-Pay elevates Procurement to the next level

Numerous organizations try to enhance their operations by utilizing procure-to-pay processes.P2P innovation can increase the effectiveness of sourcing and financial transactions. Most case studies demonstrates that in spite of the fact that a lot of associations have embraced innovations to automate operations, this has not been consistent across all areas involved in procure-to-pay.

Proficiency in both sourcing and financial exercises provide clear benefit to organizations and made operations more secure. One way that associations are hoping to expand productivity is through modernization— in particular technology adoption

Cost saving, process efficiency and transparency are the synonyms of procurement

Authored by Usama Shahid

Business process is different today. Organizations claim less infrastructure, stock and assembling gear than any time in recent memory. They've outsourced everything from customer services to inventory network. Also, a developing segment of their workforce isn't even on their full-time finance. 

Business is no more about executing a procedure inside of an organization, however over a whole value chain. It's about the insight inside of an association, as well as the knowledge of whole groups. It's not about computerizing and doing things faster, but rather tapping aggregate bits of knowledge and best practices to improve-and in completely new ways, new period for acquirement is only more than doing transactions. 

Cost savings, Process proficiency and transparency are synonyms with procurement –and in light of current circumstances. The function has turned into a key empowering and strategic enabler of business value by routinely delivering them.

Procure-To-Pay (P2P) Provides transparency and countless benefits to organization

Authored by Usama Shahid

Today’s organizations are increasing their focus on financial process automation, and many are moving to automate sourcing and purchasing activities by implementing Purchase-to-Pay activities software’s. 

We have observed that P2P software’s bringing numerous benefits to organizations and assisting material professionals to achieve core methodologies like time reduction in  Procurement Cycle, Visibility of Procurement Spend, Increased Cost Savings,  Transparent Business Process and early payments made via P2P system enhance confidence of suppliers to provide significant discounts to organization. 

Best Approach to Leverage Strategic Sourcing

Authored by Usama Shahid

Strategic Sourcing is an organized and collaborative approach to leveraging targeted spend across locations with select suppliers that are best suited to create knowledge and value in the customer-supplier interface. We cannot overemphasize the importance of operating in a collaborative manner.