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Why Is Strategic Procurement So Important For An Organization?

by Eyvo

Why Is Strategic Procurement So Important For An Organization?

Strategic Procurement – The new way to procure!

Considered a critical part of the supply chain for any company, strategic procurement is all but a necessity for organizations which intend to remain competitive in the business climate for years to come. A well developed strategic procurement process directly translates into improved business performance by way of focusing on bottom line savings in the long-term. To do so, companies need to manage and source their supply base in an efficient manner, while streamlining the process as a whole to retain strategic viability.

The procurement function in an organization is basically responsible for the same; so what sets strategic procurement apart? Basically, when considering the long-term, the process of pruning away the weeds and the unruly edges in this arena becomes an ongoing activity. As long as the organization functions, the activity continues. Companies which intent to head towards strategic procurement must understand this would require a complete overhaul of their current procurement and sourcing model. Advancements like web based purchasing and procurement software systems move from being advisable to required status. Purchasing accountability suddenly takes a whole new importance. Spend analysis becomes integral to operations.

Major Objectives

To make the shift towards strategic procurement, understanding the major objectives is essential. Let’s take a look:

Relationships with the key supplier need to be enhanced and built upon

Determining and identifying exactly which aspects result in maximum bottom-line savings

Putting a stop to maverick buying, and enforcing centralized procurement where necessary

Contract compliance should be streamlined, and errors should be eliminated to facilitate transactions between vendors and buyers

Not only the top level management, but junior executives should be equipped to deal with procurement challenges if the need arises for a proactive approach

Supply base should always remain optimally pruned, eliminating redundancies and unrationalized choices

Technology tools like web based purchasing systems should be incorporated and transition should be complete among the workforce

The shift from manual to automation must be focused upon throughout the organization’s procurement and sourcing processes, leading to significant bottom-line savings eventually

Supplier management programs should be raised to critically important status, and should remain at the core if relationships are to be maintained and further enhanced

Implementing Strategic Procurement

A look at some of the more major objectives of strategic procurement makes it clear that considerable focus is put on reducing redundancies and enhancing relationships with the supplier base. Thus, these are often the main aspects organizations consider when heading towards implementation of strategic procurement.

Those who intend to take the initiative today can take the first step by opting for technologies which help the company move towards the aforementioned aspects. Prime among these tools is procurement software. Not only does it enable companies to head towards increased automation in sourcing and procurement processes, it also offers a number of modules that enhance purchasing accountability, supplier base management, and even help with building and refining supplier relationships.