Implement these tips to achieve best practice procurement management/ Procurement Consulting
All departments should have a Standard Operating Procedure, this is useful to achieve a consistent and professional standard of best practice. Your aim is to give the same level of professionalism regardless when ever someone makes contact with the procurement team. This means as a minimum, the end user will receive a standardised level of service consistent with the professional standards that can be achieved.
Your department may be Greenfield or you may already have a level of procurement maturity, but one thing we all share is the constant strive to do better.
Depending on resources and buy in, you might want to appoint an external organisation for procurement consulting to provide an audit and review procurement maturity or gaps, or you might want to do this cin-housey in house. Here are some quick win tips to self- deliver best practice procurement.
Big Picture
Take a snap shot of the current working practice and take stock of what currently works. Use Visio to draw a flow chart with the relevant swim lanes to capture current workflow. The very first step is to understand the “As Is” To improve on the current process you need to start with a baseline. Now take a step back and be truthful about what works and what doesn’t. Keep only the best methodology and discard anything that doesn’t work or doesn’t add value.
Draw up a wish list (but make this realistic) or even better SMART. Develop this into a procurement strategy, Write a 3 year plan and explain your vision, your goals and explain the journey from the point of departure to the point of arrival.
Build a list of stakeholders, identify who the supporters are and who the blockers might be. Who has the biggest influence and review this in the context of the culture of the organisation. If your organisation is a cash rich and a focus on savings is the least important aspect of procurement, you shouldn’t focus on waving the flag for the bottom line, if the organisation operates in a devolved manner, you need to identify how procurement can add value for centralised contracts whilst allowing a degree of flexibility and freedom for local buyers to do their jobs within a devolved environment.
Get the right backing. In order to achieve a policy that governs every single member of staff and a strategy that is backed up by the senior management team you need a senior sponsor. The ideal person is the CEO, if this can’t be achieved aim for the CFO or COO. Senior support and top down approach is essential, because change means having difficult conversations, sometimes with someone quite junior doing the day to day activities and sometimes with a C level executive or head off, who wants results and doesn’t want procurement to stop them.
Set the scene. Change should not be a big bang, the more you promise the bigger the potential fall from grace. Hearts and mind-sets can be won using incremental quick wins. Use an evidence based approach to give a proof of concept. Choose a friendly stakeholder to get some success and let them help you raise the profile of the function. Gain traction and gather supporters before trying to tackle those who doubt this perceived re-invention.
Share
Develop a communications plan and share your objectives and success with an audience, you need to create different types of communications for different people. Use the intranet for mass communication. Request for stakeholders you have worked with to update new roll outs, let them take the lead as the budget holder but behind the scenes, those in the “know” will come to procurement.
Develop the detail
Having a grand vision is good but you need to have the policy, documents and consistent team approach to deliver the results.
Actions
Map out the “To Be”
Put aside the original workflow, we are making the assumption that this doesn’t work or needs to be updated. The “To Be” is your opportunity to start from a blank canvass, incorporate logically what good looks like. Make sure it doesn’t duplicate work, minimise effort and make it as easy for end users to engage. The nature of our work means it can be complicated, it can involve managing multiple projects, with competing deadlines and demanding stakeholders. This means your documents need to be concise and fit for purpose. Design documents and templates in a standardised format but make sure it captures not just the essential information but the full requirements stage by stage, I tend to capture information based on a need to retrieve facts quickly, tailor it to the audience i.e. hold information in PowerPoint decks that can be issued to senior management with little or no effort to amend, and capture the detail. If you need to prove something you may need to refer to the root source of information therefore your document and processes should allow you to trace things, one audience segment might be an auditor therefore information must be traceable and well organised.
Spend analytics
Obtain spend data ideally for the last 4 years from the finance system. The quality of the data is dependent on the information added to the system. In some organisations this requires a data cleanse and further coding. If there is budget invest in spend analytics tool, if not this can be done manually using an excel spreadsheet. In order to extract the best information you may need to re-categories commodities, clean up the supplier list and clean the dirty data. Do work closely with finance, you should work with them to request that they update their records, otherwise each time you extract the data it will be wrong! This can be a big task, and some elements of it can be completed by admin. Support, however some elements of reclassification and categorisation requires an element of commercial awareness so be prepared to do some heavy lifting yourself.
Policy and Procedures
Update the procurement policy. I would split this into two parts, the policy explains the governance process and the procedures is the next level of detail down that explains the “How”
Consider when you develop the how the following:
- Intranet- are your pages interesting, and easy to navigate
- Are documents up to date, have you split out documents for wider mass circulation and those to be used by the procurement team only? Remember they are different audiences and need different instructions and templates with different levels of complexity.
- What is the standard operating procedure in which the team must follow? The worse outcome is different ways of doing things depending on who takes on a project. It’s acknowledged that different procurement mangers have different levels of expertise, we are aiming for the minimum action they must perform and the maximum impression created each time an interaction is made with the procurement team.
- When appropriate include Terms of Reference for each project
- Include a project charter that can be circulated to the RACI list
- Use a standardised agenda for the initial stakeholder meeting
- Use a repository of standardised master templatesTendering & Contract Management/ Supplier Vendor Management is a whole area where best practice can be discussed and I’m not going in to the detail here.You can find templates to help you develop best practice procurement in the A-Z Templates.Retainer, interim and consultancy support is also available in London
- Work with me for procurement consulting