RECOMMENDATIONS AND NEXT STEPS Organisations understandably have different levels of maturity in implementing world-class procurement practices, many of which have been highlighted in this report. We recommend that organisations develop a clear strategy as to where they want to be in 2-3 years time and then design a programme of initiatives to execute that strategy. We see two main pillars for action: The first of these is to implement quick-win initiatives to make the most of the current situation. The second is to build a procurement capability to achieve your longer-term objectives.
1. IMPLEMENT QUICK WINS
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Spend and capability analytics
Conduct an internal spend and category analysis and benchmark your organisation against best practice. Identify those areas within your organisation or third-party spend where money could be saved and / or improvements could be made. Conduct audits of specific areas of your business to identify overpayments, opportunities for cost avoidance, supplier rationalisation, better management of internal demand, and so on. Use strategic sourcing to drive cost out of your organisation and suppliers. If this is done properly, savings in the region of 10%-30% can typically be achieved. Ensure that procurement is involved early in the sourcing process, especially in demand management and in category strategy decision making. Learn about eSourcing, train your team and start using eSourcing tools, where appropriate. eSourcing automates buying processes, cuts down the sourcing cycle time and reduces costs by 5% - 30%, especially via the use of eAuctions. Analyse and identify alternative sources of supply or supplier information to help with understanding your cost base or helping to prepare for negotiations. Design a strategy and processes for all supplier segments. Apply the right blend of contracts management, performance management and relationship management. Make sure that suppliers are meeting or exceeding their contractual obligations. For your strategic suppliers, engage with them more collaboratively and extract greater value and lower total cost of ownership (TCO) by managing these relationships more effectively. Create the ability to track third-party commitments and allow the identification of savings opportunities or risks. Minimise your off-contract spend and conduct regular due diligence on your third-party contracts.
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Strategic sourcing
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eSourcing
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Market intelligence
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Supplier management
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Contracts management
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