Optimising procurement management and procurement processes
Many buyers and executives in procurement management surely sometimes feel to be in the wrong profession: Like firefighters, they often only come into action when the house is already on fire and carry out little more than damage limitation. In order to get the best out of your purchase department, it is important to define effective procurement processes that enable the department’s early and preventive involvement, and, at the same time, to organise the available resources in such a way that one cog meshes with another to drive the pistons efficiently and achieve the best possible outcomes.
A functioning purchase department requires a goal-oriented structure, efficient procurement processes, and motivated and trained employees.
In this context, questions arise such as:
- Why is an efficient procurement management so important?
- What are important tasks when setting up the optimal purchase department?
- What does the optimal organisational structure of the purchase department look like?
- Optimised procurement processes and methods: How does procurement get the most from its resources?
- What can the development and training of your procurement teams look like?
In the following sections, we highlight the most relevant issues, discuss challenges and possible solutions, and provide an outlook on how an optimal procurement management and efficient procurement processes can make a decisive contribution to a company's success.
Why is an efficient procurement management so important?
Only with optimised procurement managementpurchase departments can achieve the best outcomes specified by the procurement strategy. Efficient workflows, streamlined approvals, and daily coordination make the most of valuable resource time. Superior communication processes and data evaluation are the basis for more accurate and comprehensive information, which is essential for good decision making. Moreover, procurement relies on high-quality, motivated, knowledgeable employees performing at the best of their abilities, through clear assignment of responsibilities, the provision of opportunities for further training and education, access to up-to-date information, and continual motivation and inspiration.
What is important when optimising procurement management?
Procurement management relates to the organisation of information, procurement processes, systems, and personnel in such a way that the objectives set by the procurement strategy are achieved with the highest possible efficiency.
Effective procurement management structures resources and procurement processes in such way that the set objectives and tasks of the procurement strategy can be reached. The alignment and control of the purchase department is the responsibility of the procurement management team, as well as the associated HR managers and, in some instances, the executive team. As a rule of thumb, regarding timing and frequency of changes in procurement management, far-reaching organisational changes are not recommended at intervals shorter than one year, since they are usually accompanied by a knowledge transfer and familiarisation phase. However, reviews and improvements to procurement processes, information flows and through upskilling the purchase department in form of trainings can and should take place more regularly.
Typical challenges and possible solutions for purchase departments
In order to find out how an optimal purchase department is set up and what short-comings might look like, we describe in the following section some typical situations and challenges as well as possible solutions.
What results and value-adds characterise a fully functioning purchase department?
Procurement management aims to achieve the objectives defined in the strategy. How a company organises its purchase department determines whether and to what extent these objectives will be achieved:
- The optimised organisational structure of your purchase department ensures that you fulfill all business-critical roles of procurement with the available resources and prioritises the activities and controls that maximise the efficacy and efficiency of your procurement processes.
- To make the most of your procurement resources, it is essential to have optimised procurement processes and methods. These must be implemented and controlled in a sustainable manner.
- Investment in your employees in the form of consistent further education and training ensures the sustainable implementation of processes as well as the development of the skills and knowledge required in present-day procurement.
OCM offers comprehensive support in optimising procurement management and implement required efficient procurement processes. Through our Procurement Operating Model project module, we support you in developing and implementing the optimal organisational structure. In the modules Procurement Process Optimisation and Training: Strategic Sourcing and Negotiation we support the implementation of the optimal procurement processes as well as the further development of your employees.
In this way, we combine our proven approach towards designing the optimal procurement management with the elements necessary for sustainable implementation.
We would be happy to present our approach and project modules to you or discuss concrete solutions based on your challenges. You will also find further project modules in our extensive product offering Procurement Consulting.
Our project modules at a glance:
Procurement Consulting Modules
Procurement Opportunity Assessment
- Benchmarking & Identification of Opportunities
- Tangible Action Plan for Implementation
External Cost Transformation
- Reduce costs & stop maverick buying
- Procurement Optimisation & Zero-Based Budgeting
Procurement Process Optimisation
- Procurement processes optimisation: fast, cost-efficient, digital
- Trained and invested employees
- Improving compliance
- Procurement Strategy & Cost Optimisation
- Increase quality & prevent maverick buying
Procurement Strategy Design
- Sustainable max. value contribution through optimal procurement strategy
- Reduce costs, optimise procurement processes
BI Cost Reporting
- Consolidated data sources
- Meaningful live analyses
- Fact-based decision making
Procurement Operating Model
- Maximising the value-add of the procurement organisation
- Optimise, measure, & control procurement processes
Training: Strategic Sourcing & Negotiation
- Buyers trained as specialists
- Putting theory into practice and implementing with support
Interim Procurement Manager
- Rapid response: candidates within 48h
- Matching of requirements and assessment of suitability using procurement experts
- From operational buyer to CPO
- Competitive advantages in speed, scope, & significance of information
- Efficiency through automation, data integration, & process simplification
- Procure-to-pay cost reduction
- Fraud prevention
- Efficient Cooperation
- Performance-based Supplier Management
- Cost Optimization
- Bespoke Optimal Insurance Cover