Top 10: Procurement Strategies

Top 10 Procurement Strategies
Top 10 Procurement Strategies
Procurement Magazine breaks down the Top 10 procurement strategies every professional needs to know to drive long-term success

As sourcing and procurement become more critical alongside the rise in complexity of the overall supply chain, professionals in the industry will need to be more strategic in their operations honing in on discipline, consistency, risk management, optimisation, and digitalisation. 

“Chief Procurement Officers must be prepared to update their strategic plans and communicate the expectations and aspirations of supply chain procurement to their leadership, peers and teams,” says Gartner.

Supplier relationship management (SRM)

In the management and maintenance of relationships between a buyer and supplier, supplier relationship management (SRM) is one way for organisations to connect the supply chain and key suppliers with the strategic interest of the organisation. 

A well-designed SRM programme can help companies increase their collaboration and identify the right kind of suppliers suited to their business, product and beliefs. It can also help to improve cost optimisation, top-line growth, supplier innovation, and process improvements.

Strategic sourcing

Compared to traditional sourcing methods, strategic sourcing is a long-term process seeking to create the best value possible while looking at the total cost of ownership. Strategic sourcing is a targeted approach to procurement that requires a continuous re-evaluation of sourcing activities, analysis of markets, and recognising of the goals of the organisation. 

With strategic sourcing, organisations can make their procurement processes less short-sighted and cost-focused. Instead, they can develop a flexible and agile system adding to the overall value and long-term goals of the organisation.

Cost reduction 

While other factors have risen in priority over the years cost reductions remain among one of the top priorities for organisations, with many turning to technology implementation, strategic sourcing, sustainability, and many other wider strategies to further the overall cost reduction strategy. 

Risk management

It seems that you can’t have procurement and supply chains without ‘risk’, and in recent years, risk and disruption have become more commonplace. With increased volatility, organisations need to be prepared to flexibly navigate uncertainty and risk. 

By implementing an effective risk management strategy, organisations can make better and more informed decisions, reduce disruption, increase resilience, improve supplier relationships, and better compliance. 

Supplier diversity

With 9 in 10 organisations expected to maintain or increase supplier diversity strategies, they are no longer shy when it comes to promoting their supplier diversity programmes. An essential procurement strategy, supplier diversity is crucial to drive innovation, expand into new markets, and foster a more equitable business climate. It can also drive economic growth and job creation especially for communities often overlooked. 

Other benefits of supplier diversity include an increased competitive advantage, greater inclusion, and further sustainability efforts.

Digital transformation

No longer a buzzword or nice to have, digital transformation is the way forward for competitive organisations and those looking to stay ahead of the curve. Blockchain, AI, automation, Generative AI and many more are breaking through the siloed and old-school approaches to procurement to drive greater efficiencies, cost reductions, risk management, compliance, sustainability and real-time visibility.

Strategic negotiation

The bones of any procurement function are the negotiation of contracts and supply. Those organisations looking to have a competitive edge in their industry are moving beyond the traditional approach to negotiations and being much more strategic. 

Building on supplier diversity and SRM, strategic negotiation looks to build strategic relationships with suppliers, vendors and stakeholders to create a win-win situation. With this approach, organisations can benefit from cost optimisation, collaboration, and visibility. 

Demand Forecasting

With the rise in volatility and disruption, the more information procurement can collect the more accurately the function can make decisions. With demand forecasting organisations can plan raw material retention, manufacturing, allocation of resources, revise pricing, and expedite fulfilment.  

By being more strategic in demand forecasting and the implementation of technology, organisations can reduce risk, improve budgets and costs, improve customer service and reduce downtime. 

Continuous improvement

In the current business landscape, continuous improvement is vital to stay ahead. Taking a continuous improvement approach to procurement ensures that processes, strategies, and technologies evolve and adapt to changing market and business needs. 

Benefits of continuous improvement include cost savings, supplier relationship development, risk mitigation and compliance, operational efficiency and continuous innovation.

Sustainability

As the importance of sustainability and ESG continues to rise, applying an effective sustainability strategy to procurement is no longer a nice to have but a MUST. Having a strategy in place to tackle this across not only procurement but the entire supply chain is essential. 

The benefits of a sustainability and ESG strategy include improved reputation, reduced GHG emissions, a boost in employees' wellbeing, and the support of local communities.

******

Make sure you check out the latest edition of Procurement Magazine and also sign up to our global conference series - Procurement & Supply Chain 2024
******
Procurement Magazine is a BizClik brand

Share

Featured Articles

Beko: Supplier ESG Plan Delivering Sustainability Success

How is home appliance giant Beko using their sustainable supply chain management and Supplier ESG Programme to deliver sustainablity success?

Four Speakers Announced for P&SC LIVE London

Executives from Vodafone, Unipart, Mastercard and SAP will join Procurement and Supply Chain LIVE when it returns on September 24 & 25

We’re LIVE: Procurement & Supply Chain LIVE New York – Day 2

Join us for day two of Procurement & Supply Chain LIVE New York, the ultimate virtual event for leaders in North America and Canada

We’re LIVE: Procurement & Supply Chain LIVE New York – Day 1

Procurement Strategy

Four New Sponsors join P&SC LIVE London in 2024

Digital Procurement

P&SC LIVE London Welcomes Four New Sponsors

Procurement Strategy