Procurement Strategy Consulting Helps to Maximize Business Profits
The role of procurement serves as a key link in an organization’s supply chain. Procurement is a critical business function that has significant and direct impact on a business’s bottom-line performance. Experts in procurement strategy consulting are a valuable resource to organization’s hampered by inefficiency and seeking to transform their procurement process.
Strategic sourcing and procurement is about obtaining goods and services to fuel a business’s supply chain. The balance of what to buy, when to order, from which vendors, and how many, can seem like balancing on a tight rope. The intricacies of the right strategy, within streamlined processes, can make a big impact managing costs.
A procurement consultant helps optimize your procurement process and serve as an efficient hub within your supply chain. Towards the goal of maximizing profits, procurement strategy consulting can address the quality of suppliers, enhance collaboration across workstreams, and integrate better cost savings and margins.
The procurement team is central to an organization’s overall supply chain functionality. It is critical to collaborate and communicate across supply chain functions to ensure efficiency. Those that operate in a silo, without connectively to such areas as sales and operations planning, inventory management, operations, logistics, and risk management will never maximize the cost savings and positive impact on the business.
Organization face challenges day-in and day-out within their procurement strategy and structure. Most businesses attempt to overcome the constant deluge of difficulties, all in the effort to reduce the bottom-line. However, attempts at identifying where the problems are, outlining comprehensive solutions, can range from overwhelming, to frustrating. Experts in procurement strategy consulting can dive into the chaos and devise strategic and effective path forward to operational efficiency.
Clear and defined documented procedures are critical to the procurement process. Without operating procedures that are practiced and followed, blown budgets and cost overruns are guaranteed to follow.
In an efficient procurement environment, it’s a fine balance between strategic spending and urgent purchases. However, a consistent “coloring outside the lines” and lack of adherence to proven procurement processes through undisciplined spending with last minute buys at higher cost triggers any number of avoidable issues.
Process inefficiency can be attributed to the procurement team or across the supply chain infrastructure. Regardless of the process inefficiency source, lack of adherence to established procedures can ripple across the organization.
There are numerous risks that directly impact the procurement segment of an organization’s supply chain.
- Supplier contracts, including those for goods or services from a sole supplier
- Sourcing risks involving product quality, reliability of vendor, delivery, and tracking
- Market risks associated with product availability and price fluctuation
- Fraud from theft or invoice deception
- Compliance risks related to policy, legal, or industry standards
- Maverick spending on purchases outside of standard procedures
An organization’s vendors play a key role in ensuring goods and services are received on-time at the best negotiated rate. It’s critical that the procurement team builds and maintains solid relationships with their vendors. Yet often, supplier management can be a challenge for many organizations.
How well an organization manages their suppliers impacts the overall procurement strategy. Without procedures in place to properly onboard and monitor vendors, issues can arise from order inaccuracies, delivery timeliness, contract compliance, and overall performance.
Organizations must have accurate data to manage procurement strategy and decisions. Unreliable data can lead to inventory excess or shortages. The cause and effect of inaccurate data and procurement actions leaves an organization vulnerable to a chain reaction of excess costs and delay in schedules impacting operations.
The ability to make sound procurement decisions based on solid and transparent data cannot be overstated. The ripple effect of inaccuracies can be felt across the organization and most impactful to the bottom-line.
Procurement training and employee development
How well an organization builds and retains its procurement expertise is correlated to its overall effectiveness in its procurement efforts. Procurement is woven throughout the supply chain. Lack of proficiency in procurement best practices, adherence to procedures, and expertise in strategic spend areas will negatively impact the bottom-line.
Knowledge transfer and document management of procurement efforts is critical to long-term success. An organization’s people are critical to operational efficiency. Without a concerted effort to consistently train and develop your people will lead to high turnover and limited team knowledge.
Our Approach to Procurement
Procurement’s role in an organization’s supply chain is ever-more critical in today’s business climate. While the procurement team is focused on tactical applications to reduce costs and improve efficiency, its role expands as a strategic partner within the enterprise. Many organizations realize the importance to transform their legacy procurement practices to align with the organization’s growth and efficiency.
It Starts with Discovery
At RTG Solutions Group, our approach is specific to understand and document how your procurement work is currently done. In the discovery, our procurement consultants will meet with your team and conduct a needs assessment of your processes and the interconnectivity across internal and external workstreams.
We’ll capture and analyze operating details such as your sourcing strategies, how you select vendors, manage the supplier relationships, and negotiate pricing and contracts. We’ll also review how your team leverages purchasing power and manages risk.
For more information on Needs Assessments, check out our 9 Priorities for Conducting a Needs Assessment.
Outline Processes, SOPs, & Evaluate Efficiency
Next, we’ll map out the current state for each of your procurement processes, including workflows, lead times, and interdependent roles and connectivity.
As with improving processes in any area of the business, we must first capture the current state and baseline measurements for tracking KPIs. In evaluating the process efficiency, we identify the gaps and outline opportunities for improvement.
We’ll develop standard operating procedures (SOPs) to maintain standards and consistency. As our procurement specialists evaluate overall efficiency, we’ll engage your team on establishing a continuous improvement culture.
Establish Document Management Protocols
Effectively managing content workflow processes, version control procedures, maintaining compliance requirements, and managing SOPs is a challenge for many organizations. We will develop a sound document management approach that is essential to manage your information lifecycle throughout your supply chain infrastructure.
Employee Training and Development
We believe people are the lifeblood of any organization. We’ll assess current training practices and approach to developing your procurement team. We’ll assess skills of your team and knowledge gaps. We’ll work with your Learning & Development team to incorporate any necessary training.
For organizations seeking to solve problems related to the frontend of their supply chain, we can meet your procurement strategy consulting needs. Your procurement efforts are crucial to your supply chain efficiency and achieving bottom-line goals.
Let’s start a conversation. Contact us today to start tackling your procurement challenges.