Today, executives are expecting more out of procurement, especially when working to reach ‘targeted profits.’ So, here is the question. “Is your procurement operation performing as successfully as it can or needs to be?”
Stakeholders want to put in place the right organizational structure and talent to run their operations. However, it is equally important to have effective business processes in place. Otherwise it is very difficult to reach ‘higher’ performance levels.
Procurement Process Review and Assessment
The first step in the procurement process review is to fully understand the company’s business objectives. The question is how well are the Procurement department objectives aligned with and supporting the firms overall goals?
Next, it is necessary to carefully map and document all of the procurement department processes. Similarly, it is necessary to look closely at the department activities, the results achieved, and how this aligns with the business objectives. The results should be benchmarked against the performance of other leading companies in the same or similar industry.
Another issue to deal with is calculating the amount of resources needed to perform all necessary activities and meet all objectives. This means looking at the daily tactical issues as well as all strategic goals. The use of a current ‘Department and Positional Activity Analysis’ model helps a company determine the appropriate number and level of resources needed for the department.
Finally, it is critical to review skill levels, education, and practical experience of personnel in the department. Otherwise, you may not have sufficient numbers or talent in the strategic and tactical positions to accomplish the specific company goals.
Procurement Process Reform
At this point, it is necessary to review the processes needed so that the company can reach its objectives. If this involves changes, such as changing or replacing specific processes, then is documented and a plan developed to migrate to the new ‘normal.’
It may be that some of the current procurement processes can be combined or updated. In some cases it may be possible to discard legacy processes that no longer apply. If any training is needed, it is documented in the plan.
Next, the business case is presented to senior management for approval. The business case addresses all aspects of the plan, i.e., the changes, benefits, timeline, what positions are responsible for what activities, etc. At this point, if the plan is approved, an implementation team is identified.
Upon senior management approval, the entire program and steps are carefully planned out with the company’s implementation team. It is very important to ensure that all company personnel understand senior management’s support for the program.
Likewise, the company’s implementation team must understand how the company currently operates and what changes are needed to meet the new operational requirements. The questions of who, what, where, when and why are all answered in detail including ownership, authority, and responsibility for the processes.
Evaluation and Control for Procurement Process Management
With stated objectives and any reform in place, it is important to know how well the company is operating with these new processes at regular intervals. Otherwise personnel will be unable to make any adjustments needed to succeed.
This is especially true when introducing new processes, or when tracking progress on any legacy programs. Tracking is accomplished by using key metrics based directly upon the processes and the business objectives.
The business activity measurements are recorded and reported in ‘real time’ as often as needed. The results are reviewed and discussed. If there are any questions or if the results received are not meeting expectations, the processes are again reviewed to see what if any changes are necessary to get back on track and meet objectives.
The ‘Bottom Line’
Executives expect the Procurement department to help the company reach objectives. If the procurement group isn’t as successful as it should be, the group may need some help. A procurement process review assesses performance. The Procurement Process reform refines activities, changes processes, or introduces new programs. It is imperative that the company’s implementation team be fully informed and capable of implementing the new processes. Continuous improvement is accomplished by using a program of evaluation and control, measuring present execution against key metrics for the company and industry standards.
Manufacturing and Supply Chain Services
We are Manufacturing and Supply Chain Services, MSCSGRP, specializing in ‘enterprise wide’ procurement and supply chain management programs. Our company’s proprietary processes and services promote organization, control and cost reduction boosting your company’s bottom line. How can we help?
Organizational Structure and Performance. Top performing organizations require structure, culture and resources to produce high performance. Departments designed around four specific areas achieve higher performance levels. For more on this topic, please follow this link.
Transforming Procurement Operations. Today, procurement is expected to play a much larger role and bring value to the entire business enterprise. Some organizations have difficulty migrating their legacy processes to more advanced procurement models. For more on this topic, please follow this link.
Manufacturing and Supply Chain Services
We are Manufacturing and Supply Chain Services, MSCS, specializing in ‘enterprise wide’ production and operations management programs. Our company’s proprietary processes and services promote organization, control and cost reduction boosting your company’s bottom line. How can we help you?