The world of Procurement, including the different technologies, methodologies and strategies will continue to evolve and have a significant organizational impact in the coming year. Staying abreast of the latest trends and offerings will differentiate best in class organizations from those that fall behind.
How can you complete your day-to-day tasks while navigating the future of Procurement?
One step at a time. What are the steps?
Below are twelve steps to help achieve Procurement success in the coming year:
1. Review prior year performance against goals and set new goals for the upcoming year.
“The new year stands before us, like a chapter in a book, waiting to be written. We can help write that story by setting goals.” ~ Melody Beattie.
While this is an obvious step to take, it has to be stressed. Document your goals and ensure the process for measurement and sustainability. While many organizations have a process to drive goal development you should develop goals specific to procurement and the Source-to-Pay process that support higher-level organizational goals and objectives. This can include category management plans, sourcing project execution, supplier management follow through, contract management and compliance, improvements in transactional efficiencies via a P2P system, or delivering value through improved cash management.2. Update your spend data and supplier segmentation.
After your prior year spend data is fully loaded in your procurement system, you should review your supplier segmentation to ensure changes within the supply base and any new suppliers are identified as Critical or Strategic (see “Maximizing Value and Minimizing Risk Through Effective Supplier Management” blog) and are added or removed from your supplier management program.3. Review your Category Management plans and identify those that need to be updated and reviewed. Then execute via Strategic Sourcing.
Take the time to look at your categories to identify plans that need to be refreshed. You should review category management plans for categories annually to ensure that changes in the market and organizational requirements are fully understood and aligned. You should also take the time to segment which categories should be reviewed. If your category plan is more than two years old you should add it to the Category Management review list as well. Then work with the business to execute the category plans through the most appropriate Strategic Sourcing strategy and drive measurable value to the organization.
4. Revisit and review your risk mitigation action plans for your top suppliers.
Are the risk mitigation plans still relevant or should they be updated to reflect changes within the market or the supplier? Are actions actually being taken to prevent risk?
5. Prepare for Annual Business Reviews with your critical / strategic suppliers.
Take the time to ensure all of your business review meetings are scheduled with the appropriate internal and external (supplier) stakeholders. Communicate your expectations of the meeting with your suppliers. The business review should be a time to review the prior year successes and failures and develop plans for the upcoming year. This is an important part of Supplier Management (see "Remember The Supplier" Blog) and a great opportunity for your critical / strategic suppliers to communicate with you about their organizational plans and for you to ensure the supplier is meeting your current needs and is capable of meeting your future needs. Are both parties proactively seeking the best value?6. Identify contracts that will need to be renewed during the upcoming year.
Stay a step ahead of renewals to allow time for appropriate planning. If you have a contract management program you should easily be able to get a list of all contracts expiring in the coming year. Use this list to create a plan to approach each renewal and make sure it is linked back to your category and strategic sourcing plans.7. Invest in Procurement systems and IT.
If you don’t currently utilize a Source-to-Pay system consider approaching your organization to promote the business case for making the capital investment in procurement technology. Source-to-Pay systems have a positive ROI and can help make your organization more efficient and effective in achieving your goals and objectives. Changes in Procurement technology will continue to impact organizations - don’t be left behind.
8. Learn something new everyday.
You are surrounded with learning opportunities without leaving your office through social media, webinars, and podcasts. We live in the world of information sharing – be sure to engage and gain the knowledge needed to take the next step. Of course – www.nitorpartners.com is a great resource.
9. Rethink your payment options.
Are you meeting the needs of your customers and suppliers with your payment options? This year is the time to evaluate your cash management strategy and ensure that your organization is getting the best value possible.
10. Lead an initiative to break down barriers between the Procurement and Finance functions.
Together you can accomplish more than you can alone. The relationship between Procurement and Finance is important. In fact, in some organizations, Procurement is part of the Finance organization reporting into the CFO. If your organization doesn’t directly report into Finance, make sure to manage the relationship between the departments. Identify the communication gaps or pressure points and agree how to work together to minimize the gaps. Understanding Finance plans for cash management, inventory, capital budgeting, and cost take out will help you develop category plans and execute sourcing projects.11. Ask for help when you need it.
BPO services are available to ease the workload and eliminate the expense and stress of hiring short-term employees. Work related to sourcing, supplier enablement, contract migration, technology support and more. Bring in the experts to manage and deliver programs to enable focus on the key goals.
12. Celebrate your prior year achievements and plan for 2018 and beyond.
We all know that procurement is a tough job. Take some time to recognize what went well over the past year and celebrate it with your teams. At the same time, understand the trends that will affect and change your industry in the years ahead.
Ready or not, we are moving forward…don’t be left behind! Visit www.nitorpartners.com for more procurement blogs.