A quick look through history Shows that transformation goes into overdrive during economic recession. The present dire economic situation is forcing companies to rethink their current operating structure, and look beyond conventional measures in order to handle challenges to business in an innovative manner. Businesses have seen that the possibility of procurement transformation is not just limited to the conventional cost arbitrage, but efficient management of total spend, which can subsequently directly contribute to the bottom line.
The Value of Transformation
Many businesses today are realizing that procurement transformation is a key enabler in achieving corporate goals. For many organizations, procurement is on top of the corporate agenda, together with the function of the Chief Procurement Officer shifting from operational to a more strategic focus. Because of this, procurement becomes a vital enabler in achieving corporate goals in today’s challenging business environment.
It is important for businesses to evaluate the procurement process function in a holistic way. Have a framework in place outlining the procurement procedures, strategic direction and key procurement enablers to direct you. Such dimensions are crucial for the successful implementation of any procurement conversion program for purposes of attaining procurement excellence. A winning transformation strategy takes a standardized approach which allows for effective project management, efficient understanding of deliverables, and ensuring quicker results are achieved. This approach ought to be flexible enough to make sure that the expectations and demands of the client can easily be adopted.
The procurement strategy is at the core of procurement excellence and must be aligned with the corporate goals and plan. This involves having well defined procedures that include the operational side of procurement, including payment of invoices and managing contracts and suppliers. Key enabling factors will also be essential for the effective designing and performance of the procurement strategy, and to support operational procurement procedures.
Transforming for Success
Procurement transformation Enables companies to identify opportunities, realize savings goals, design tax efficient procurement arrangements, in addition to optimize operational procurement procedures. All this is accomplished while ensuring continuing risk and cost management through successful supplier and contract administration. An effective transformation Strategy will entail identifying a variety of savings opportunities and improvement projects in order to deliver appreciable savings and professionalize procurement. A business should execute an optimal procurement target working model which includes reporting lines, governance structure, KPI dashboard, detailed roles and responsibilities. Indirect saving opportunities must also be examined and prioritized in order to attain realistic sustainable savings.