#7 – Align Procurement Strategies with Corporate Strategies (by Rusty Joerin)
It has been said before, if you want to stay in business offer low pricing, high quality, and top line service – pick any two. The strategic decision is which two.
Corporate strategy should inform procurement strategy not the other way around. For example, many municipalities will prefer to obtain supplies locally thereby supporting local businesses. A procurement strategy that favours top line service with adequate quality and acceptable (but not necessarily lowest possible) price will align with corporate policy and applicable legislation.
Similarly suppliers that offer the types of goods purchased by municipalities will want to promote their services such as job site delivery, inventory management, product knowledge, supply records and efficient invoicing and payment systems.
Many public organizations give careful consideration to outsourcing some of their functions while performing others with resources maintained (and controlled) in house. These decisions will inform corporate strategy and are made at the top level of organizational governance. Procurement can have an important role in the decision making process through the provision of both hard and soft data to the decision makers.
Make or buy analysis can compare the financial costs of outsourcing a function vs. doing it in house. A spend analysis will contribute costing information to the decision process. Every case is unique.
Procurement can also provide much of the softer data that goes into an outsourcing decision. An analysis of the capabilities and/or capacity of the marketplace compared to the organization’s capability/capacity can be performed by skilled procurement professionals. In some cases, it is worthwhile to explore ways and means for public and private sector organizations to form a partnership to deliver a particular good or service.
Applying a procurement strategy that supports the corporate strategy provides the consistency that creates value for the buying organization.
------------------------------------------------------
Other Posts in the series: How to Add Value to Your Procurements
• Be Proactive
• Analyze what is required – bring clarity to the specification
• Understand the supply chain
• Align procurement strategies with corporate strategies
• Apply the highest standard of ethics
• Use the right tool for the job
• Plan contract management before there is a contract
• Learn from what was done
• Mitigate procurement risks
• Utilize the skills of supply management professionals
Over the coming year, Rusty Joerin, guest blogger, will expand on the above. Your comments are welcomed.
Rusty James Joerin, C.P.P. is a Supply Chain Management Professional and accredited by the Purchasing Management Association of Canada as a Certified Professional Purchaser. He offers procurement services primarily to public sector organizations that do not have a professional supply manager on staff and provides additional capacity to assist with project related supply for those organizations with purchasing specialists on staff.
Information about his experience and qualifications may be found at: www.woodsgift.com
No comments:
Post a Comment