In a nutshell, Procurement Strategic Management means planning, monitoring, analysing and assessing all the operations it takes for a Procurement organisation to attain its objectives. Nowadays, the term “Procurement Strategic Management” is in widespread use across corporate Procurement departments. The term spans a lot of different tasks and assignments, which diverge from one company to the next depending on the degree of maturity and scope of action of each Procurement departments. It supplements “operational management”, which involves implementing the Procurement strategy in the field (contracting, procurement management, inventory management, etc.)
Managing strategic sourcing, purchasing categories, budgets, and negotiating with suppliers are all Strategic Procurement tasks. To perform these tasks Procurements teams, need to access clean procurement data and organise it in relevant ways into reports and dashboards. The aim is to shape group procurement strategy vectors such as budgets, supplier meeting schedules, etc. based on rock-solid information. A Spend & Dashboard Analytics tool empowers businesses to gather, analyse and summarise procurement data from all existing sources (your ePurchasing tools, other IS, ERP, Excel, external data providers, etc.) following a common reference framework deployed at group or corporate scale. Procurement departments use this tool to produce on-demand reports and customised dashboards to monitor KPI trends and share a unique Procurement vision across the company.
“With regard to spend analytics, all major international companies are faced with the same challenges: gathering, summarizing and analysing purchasing data from heterogeneous information systems (several tens of IS can sometimes coexist) and cleaning and homogenising large quantities of data (invoices, orders, supplier accounts, etc.).” Gérard Dahan, General Manager EMEA Ivalua.
A powerful Spend Analytics tool can significantly reduce the time and efforts required to clean and summarise spend data and improve its quality so that the Procurement departments can concentrate on analytics and strategic management.
Action Plans formalise a business’s procurement strategy and include strategic projects’ planning, their main phases, objectives and the indicators needed to identify and monitor the gains achieved.
“The procurement departments must contribute a little more to the company’s financial results each day. Procurement action plans are developed on a permanent basis with this goal in mind, but managing a large number of actions involving multiple players in a complex environment and monitoring the gains achieved are not easy matters.” Gérard Dahan, General Manager EMEA Ivalua.
A powerful action plan management tool empowers Procurement departments to form project-specific teams, manage their individual tasks, objectives and timeframes within a collaborative space conducive to interaction and communication. By updating objective-related data, Procurement divisions monitor gains achieved in real time and are able to effectively allocate resources throughout the year to optimise results.
Implementing an action plan and a savings tracking tool provides a reliable and precise way to track the origin of financial gains resulting from Procurement actions at both the global and local levels in addition to more relevant analytics of the best gain levers to actuate.
Managing a company’s strategic supplier performance is one of Procurement strategic management’s objectives: competiveness, creating value and controlling risks. Major groups working with a broad supplier ecosystem need tools to better manage communication with their strategic suppliers and monitor risk, performance and quality indicators on a regular basis.
“Implementing a routine supplier assessment procedure and progress plans sets up continuous improvement dynamics with suppliers by committing them to measured performance targets.” Gérard Dahan, General Manager EMEA Ivalua.
Automating Supplier assessment and performance using a supplier performance management tool provides Procurement teams with valuable time savings. By updating assessment data from questionnaires sent into the field or by automatically integrating third party data sources (CSR, legal, financial information, etc.), procurement divisions can benefit from a 360° view of each supplier. This reduces a company’s risk exposure and induces powerful collaborative relations with high-performance, low-risk Suppliers.
Detailed performance analytics per supplier or per category are used to focus purchasing efforts by creating a Supplier Progress Plan. This process invites the Supplier to commit to qualified objectives, performance indicators and more transparent improvement actions with the overall aim of forging a sustainable partnership.