Procurement teams today are constantly faced with challenges and opportunities from increased competitiveness, accelerated globalization and the rise of services as a vital marketplace differentiator. It has become important for organizations in many different industries to reassess their current strategy and continue to confirm its efficacy based on both the current and expected future business environments. This is accomplished by procurement conversion, a process that generates long term benefits to the organization.
The Need for Transformation
Procurement transformation is a Holistic approach to enhancing all aspects of procurement in an organization, for purposes of attaining long-term sustainability. Continual procurement strategy planning and the consequent transformation initiatives bring about billions in annual cost savings for companies, while providing leading products and solutions to the world. This type of procurement strategy affirms the continuing desire of a company to stay competitive, drive productivity, cost reduction, and in addition to guarantee provide quality, security and continuity for clients.
The core component for any Successful mro industry approach derives its value from its people, technologies and processes. These contribute in securing services and products in support of internal partners and external customers, thereby developing and delivering quality products and offerings. The benefits that result from this type of action include:
- Higher profit from the best type of commodity, labor and delivery price reductions
- Improved internal and client partner satisfaction based on improvements in supply quality, continuity and the value of products and services obtained
- Optimized cash flow
Developing Your Strategy
Businesses need to operate under a continuous planning cycle to refine their procurement conversion strategy. This involves incorporating the following key components for plan development, which can be applicable to all organizations:
- Strategic Marketplace Drivers – Customer, supplier and competitive arenas
- Corporate Strategic Intent – This includes driving growth and profits consistent with the principles and strategic imperatives of the Company
- Procurement Business Design – Growing procurement leverage, year on year productivity improvements, and facilitating strategic growth and value
- Innovation – Incorporation of technological improvements or procedure design that emanates from providers, laboratories and research groups
By following this model, a Business can internally develop a set of strategic actions for addressing these challenges and take full advantage of opportunities in the fast paced market. Crucial to this strategy is that the alignment of the highlighted tactical activities into different imperatives that represent the nucleus of this procurement conversion strategic plan, which is applicable to the majority of procurement organizations.