Cost Reduction Checklist Part 2: Procurement Transformation

In order to accurately assess current maturity against the standard procurement operating model framework of strategy, organization and people, core capabilities, and enablers, you need to answer a set of questions against each element.

It is important to define the target outcome and end state in clear statements to make the ambition and rationale clear to procurement, management, and all relevant stakeholders, and to achieve the right buy-in and joint ownership of targets. Tapping into alternatives and best practices that exist in other companies and sectors helps to bring balance and perspective to the assessment and respective answers.

Strategy 

• Is the procurement operating model aligned with the mission and vision of the organization, and is it positioned and mandated to enable the required contribution and related value?
• Do we recognize all elements of a good target procurement operating model and address these well?
• Are we seen as an attractive value proposition to our customers internally and externally?
• Does procurement have a seat at the senior table and is not just seen as a cost management function?

Organization and people 

• Have we future-and-growth-proofed our procurement set up and made sure it’s aligned to business imperatives? 
• Have we thought about what is core and non-core to us – what activities need to be in-house and what can be provided externally?

Core capabilities 

• Are buying decisions fact-based, and do key spend areas have a clear pipeline of activities, with measurable improvement in cost and service?
• Do we understand and execute contract and supplier management well enough? Do we have the right metrics to measure procurement performance?
• Are we viewed as real partners to the wider business? Are our processes adding value or just an administrative overhead? 

Enablers 

• Have we assessed if all aspects of end-to-end procurement are enabled by fit-for-purpose tools and technology?
• Do we have clarity on how our procurement systems and technology perform, and does data transparency drive robust decision-making?
• Are we managing risks in the supply chain, while proactively responding to regulatory, compliance and sustainability requirements?

To learn more, download the full Procurement Tranformation Guide below.