Question

You are a procurement officer for a major company in the extractive indust Develop a sustainable procurement strategy for your company

Answer 1

Procurement strategy is a long term plan to acquire the neccessary supplies from a list of vendors cost-effectively who will deliver quality goods on time. Important procurement strategies that can be adopted by everyone are cost reduction, quality management, green purchasing, global sourcing, risk reduction, supplier management etc.

Effective procurement strategy process :

1. Analysis of organizational spend - Here analysis of existing spend culture of organization is done by obtaining data from internal stakeholders, suppliers and other parties.

2. Determination of business needs and assess market conditions - Category positioning matrix tool can help organizations to determine the business requirement that are helpful in development of procurement strategy. Porter's five forces methodology can be adopted for market conditions.

3. Set objectives - After business needs are identified, what needs to be achieved are set here. For this, SWOT Analysis can be used to identify the current state of procurement functions.

4. Identify procurement policies - By eliminating existing inefficiencies, a new list of procurement policies is framed. This can be done with the help of risk identified through swot analysis.

5. Implement the procurement software - It will improves employees productivity and reduces the chances of errors. This can be done by eliminating manual data entry and associated inefficiencies.

6. Make an outline and develop the digital procurement strategy - Make a draft of procurement strategy with help of data and information obtained earlier and then draft of digital procurement strategy is done. For this, the organization need to revamp the procurement technology, strategy, process, skills, talent etc.

7. Execute, manage and refine the strategy - When the digital strategy is created the next step is to execute it which involves other business functions like HR, admin, sales. Then at last measure the progress and manage the strategy accordingly