Does your procurement strategy drive business success?
Strategic procurement can drive competitive advantage by enhancing revenues and lowering cost. Procurement can be said to be strategic in an organization if it contributes directly in the business planning process. To do this successfully, however you first need a clear understanding of your organizations strategy:
- Is your organization following a Cost leadership, or differentiation strategy?
- What is your organizations growth strategy – new product launches, acquisition plans, divestiture plans etc?
- What make v buy decisions support your organizations value chain?
- At what stage of the industry or product life cycle is your organization and how does this effect procurement strategy?
- What are your organizations competitive priorities – cost, quality, speed to market etc?
When you have the answers to such questions you must determine if you have the right mix of capabilities to make an effective contribution and put in place development plans to close any capability gaps.
If you have the answers to all these questions and the capabilities in place to execute plans to make an effective contribution, then congratulations – you are already a leader in your field. If you find yourself not able to answer all the questions and have gaps in your capabilities then you have an opportunity to develop your procurement capability and demonstrate procurements vital contribution to the long term success of your organization.
Very few CPO’s are in the fortunate position of contributing to their organizations success at such an aspirational level, but it is such a level that the ‘Brave CPO’s’ out there must aspire, if we are to continue procurements drive to sit at the top table.
What are you doing in your organization to contribute at a strategic level?
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