What is a procurement strategy?
A procurement strategy would refer to the planned approach of cost-effectively purchasing a company's required supplies, taking into consideration several elements and factors such as the timeline for procurement, the funding and budget, the projected risks and opportunities, among others. Procurement, by definition, is the acquisition of the materials, supplies, services, etc. that a company or project requires in order to successfully operate. ... To develop an effective procurement strategy or sourcing strategy, first it is necessary to sit down to assess the details that you have to work with.
Why do you need a procurement strategy?
The procurement function is concerned with obtaining the required goods and services from appropriate suppliers to enable the institution to meet its strategic objectives in an economic, efficient and effective manner.
If procurement is required because it adds value to shareholders, increasing procurements value requires increased procurement savings. Higher savings might be achieved through lower supplier pricing but is a tactical approach that might be strategically damaging to the sustainability to the supply base.
What should a procurement strategy include?
Procurement, by definition, is the acquisition of the materials, supplies, services, etc. that a company or project requires in order to successfully operate. ... These details will include the business' or project's objectives, the available and existing resources and supplies, the budget and the timeline. The procurement process can be complicated one. Strategic procurement is an organization-wide process. It requires input from all departments and functional areas for an organization. Organizations should set up a strategic procurement team. This team sets the overall direction for procurement, aligned with the business strategy. The team will then use the data from the strategic procurement process to develop and implement a strategic procurement plan.
What is the overall purpose of a procurement strategy?
An effective procurement strategy is a financial plan to manage your budget, workflow, and production timelines and keep everything aligned with company objectives. The goals of procurement strategy: Minimize error and lost savings opportunities. Identify authorized buyers. The procurement function is concerned with obtaining the required goods and services from appropriate suppliers to enable the institution to meet its strategic objectives in an economic, efficient and effective manner.
What is effective procurement?
Procurement is most effective when the roles of users, suppliers and management are aligned with the strategic direction of an organization. A CPO or CFO should foster an environment where procurement policies are adopted throughout an organization to develop spend saving and cost effective results to an organization. An effective procurement process ensures higher process efficiency at every stage of a procurement cycle in an organization, which in turn shortens sourcing cycle times. Procurement is more than just purchasing goods and services for an organization.
Is procurement a strategic function?
The procurement function will contribute directly to the institution's corporate strategy and have representation on its Senior Management Team. Procurement information is compiled to support negotiation for key purchases. Purchase planning plays a pivotal role in the annual business planning process.