Leading Procurement Strategy: Driving Value Through the Supply Chain

Leading Procurement Strategy: Driving Value Through the Supply Chain

Mena, Carlos; van Hoek, Remko; Christopher, Martin

Part One Procurement strategy

Chapter 01 Introduction: the strategic role of procurement 

• Procurement and its impact on the bottom line

The spend is around 50% of sales revenue for external resources. The total spend as percentage of sales: 60% Chemical Manufacturing, Engineering and construction, Pharmaceutics

• Procurement and sustainable competitive advantage

• The changing role of procurement

1. Transactional procurement (no strategic involvement, decentralized, contribution is very limited, basic skills from personnel)

2. Cost-driven procurement (has strategic intent, strategic approach on minimizing the costs, using tools like spend analysis, TCO, contribution in terms of savings, analytical skills of personnel, good negotiating and contracting skills)

3. Integrated procurement (clear strategy that is aligned with organization vision, focus on alignment strategies and processes with stakeholders, portfolio of relationships with different stakeholders, creating value for the customer, additional revenue for the organization, emotional and relational skills of personal)

4. Leading procurement (transformation of organizational and leading supply chain in the search for sustainable competitive advantage, procurement professional required to have wide range of skills)

See table 1.1 from the book

• The context of strategic procurement

Strategy procurement is a process that connects organizational strategy with day-to-day procurement operations.

Activity for formulating and delivery a procurement as a three cycle processes

-Business strategy cycle (creating vision, goals, implementation and learning)

-Strategic procurement cycle (articulate mission, vision and goals, situation analysis, develop procurement strategy, implement and continuous improvement)

-Procurement sub-processes (sourcing, managing...