Procurement excellence: strategic levers and end-to-end operating model
Purchasing managers in the manufacturing industry will not be able to breathe a sigh of relief in 2023. Not only are the ongoing problems with global supply chains a headache, but the energy crisis, raw material shortages and inflation are also causing pressure. If the price increases cannot be passed on in full to the buyers, purchasing must find a viable solution to combat the exploding procurement costs and exploit all potentials.
The biggest levers are in strategic purchasing
Procurement Excellence distinguishes best-in-class purchasing organisations that are aligned with the corporate strategy and meet the highest standards of effectiveness, efficiency and competence. With a process model that translates the purchasing strategy step by step into operational activities and is embedded in the company's business process model, purchasing can increase its value contribution and effectively cushion price increases. On the one hand, purchasing costs should be reduced, on the other hand, process costs should be lowered (Fig. 1: Levers and tasks of purchasing).
The levers of Strategic Purchasing lie primarily in shaping the framework conditions: these include material group and supplier strategies, negotiating framework agreements and managing the supplier portfolio. In cooperation with Product Development, Strategic Purchasing can influence manufacturing costs through the degree of standardisation of suppliers and materials. Up to 80% of these are defined in development.
Operational Purchasing is geared towards efficiently ensuring availability. Consistent responsibilities, clear roles and highly efficient processes also enable the implementation of modern "digitalised" concepts.
Fig. 1: Procurement Excellence in the Purchasing Process Model
There is no standard solution for procurement excellence
In practice, special attention must be paid to the individual framework conditions. The most important factors influencing the redesign of purchasing are:
- Business process model and strategy
- Degree of maturity of purchasing
- individual stakeholder interests
- cultural conditions and internal position of purchasing
These factors determine, for example, the degree of centralisation of purchasing functions or standardisation of the purchasing portfolio as well as the levers to be applied in individual cases.
Fig. 2: Characteristics of Procurement Excellence
hpo accompanies you on the way to procurement excellence
Our High Performance Organisation criteria are applied in the design of high-performance purchasing organisations. Our many years of experience in the development and implementation of High Performance Organisations ensure a precise consideration of the overall context, the reliable anchoring of the solution through the empowerment of employees and a measurable impact.
