The most important steps of creating the optimal procurement strategy
It is said that good planning is half the work done and numerous examples from the business world can verify that. As one of the most important business activities, planning includes thinking ahead and setting goals – where do want to go and what do we want to accomplish. To realize all those goals, you need a good strategy. In the case of acquisition in an enterprise, it is called the procurement strategy.
What signifies an procurement strategy?
Procurement can be defined as a business function that takes care of the supply chain, i.e., supplying the enterprise with materials, services, information, and other resources needed for the business to operate. Procurement strategy is a defined plan on how to organize the acquisition process optimally, i.e., how to realize set goals of the enterprise quickly and with as less cost as possible. Considering it affects the results of the enterprise and the eventual success, creating the acquisition strategy should be taken seriously and thoughtfully.
Procurement strategy in 5 steps
1) Research as a first step
Procurement strategy is based on data, comprehensive analysis, and research. Determine what is it exactly that the company needs to provide a good service, which products are being acquired for what department and what are they going to be used for, in what quantities, what is the available budget and what are the best offers form the suppliers. Also, compare this year’s results with last years. The procurement analysis can be split into 4 basic types:
- Descriptive analysis that tells us what happened
- Diagnostic analysis that tells us why something happened
- Predictive analysis that tells us what will happen
- Prescriptive analysis tells us what we should do
Proper research and data analysis enable setting better and more achievable goals, as also resources and time management in an optimal way. Precise data on business can be taken from various software solutions for business analysis.
2) Set clear and measurable goals
In defining any kind of strategy, it is important to know what the main goals are. Goals must be clearly set and measurable. If you have measurable goals and clear results, you can control the process and analyze its success.
Regular tracking of the acquisition process is necessary for realizing optimal results. If at any moment there is a situation where you assess that there is no room for improving and bettering the process, do the initial analysis again, starting from the very beginning. Acquisition strategy will be successful as much as the process of evaluating goals and results is successful.
3) Define supplier communication patterns
Good relations with suppliers are key for the acquisition process, as is for getting results. Creating a relationship based on trust is one of the main tasks for all those involved in acquisition management. Acquisition strategy must have defined patterns of communication with the suppliers, which means that inside the enterprise, you must have a person responsible for it. The ones responsible should be aware of what is expected of them and what tactics will be used.
Relationships and communication should be regularly maintained, goals should be precisely expressed, and results should be tracked and shared with suppliers. Collective analysis can lead to new ideas and even better relationships, aimed at mutual satisfaction.
4) Choose the appropriate technology
When the procurement strategy is well designed and followed by all the employees in procurement, the whole process of acquisition should be easier. However, if you don’t have the right technology, all the effort put into planning won’t be enough for great results. Acquisition employees must have a good tool that will enable them to manage the whole process of acquisition from one place, from goods requirements, proceedings, and services to contract applications. Procurement management solution enables employees to order the necessary products and services, having control over who orders what. The whole process is then easier and quicker, it lowers the possibility for error and optimizes resource management.
5) Focus on the end user
As we’ve stated before, the acquisition planning and the strategy-creating processes are based on realizing goals. Logically, before you direct your attention to supplies, the supply chain, interpersonal communication, and the acquisition process, think about the end-user of your products or services. And finally, client satisfaction and customer experience have never been more important.
Acquisition exists for the sake of fulfilling users’ wishes and needs, so its advisable to devote enough time to analysing behaviors, demographic features and clients’ buying habits.
Plans are nothing, planning is everything. – Dwight D. Eisenhower
Planning is a process, and procurement strategy is just a part of it. Although it is important to have defined steps and tactics, by no means should you limit yourself. Flexibility and adaptability to new situations is very important for staying competitive in the market. Always follow what is happening, always be informed and always surround yourself with partners you can trust and who can help you in the business process if there is a hiccup along the way. Good luck!
