Procurement Basics: The 3 Pillars of Truly Effective Procurement

恭喜發財 or Gung hei fat choi from Hong Kong*

The start of the year of the Rooster means we will consider what we need to achieve in the coming months, hence I thought I'd share my approach for developing truly Effective Procurement*^

It's not Rocket Science, so let's keep it simple

Truly Effective Procurement can be said to be dependent upon Three Key Pillars:

? Policy

? Strategy

? Organisation

Once these inter-related Pillars are optimised you will be fully prepared and able to meet your corporate and other needs

Don't panic!

Most organisations are not optimised^

...by reviewing your current situation and then identifying the main areas for improvement, you will have created a development plan - the starting point for reaching your corporate, departmental and personal objectives

Key Points:

1) Each Pillar is inter-related and is in turn comprised of sub-components

2) By first understanding the current status of the Pillars and sub-components - and then defining the ideal state of each; you will have already produced a basic development plan - ta dah!

3) Note well: the relationships and dependencies between the Pillars means that, while focusing purely on one area (say, processes or systems) will lead to improvements, those improvements may not yield their full potential until another area is also improved

4) As well as their inter-dependence, there are only so many hours available - hence your development plan must consider the:

? Significance of the gap between the Ideal and Current state

? Effort/benefit ratio of the identified change

? Sequence & priority of each change 

5) Stakeholders; by all means develop your own initial thoughts and ideas - but as I've stated before and I'll keep reminding:

' Procurement buys and consumes almost nothing for itself'

...so proactive stakeholder involvement is fundamental

6) As always# if you've gone to the trouble of developing a plan - use it; assign actions to specific people, monitor progress, modify as you learn and so on - basic project management stuff

Do this and you'll have a robust development plan and the ability to make real progress this year - good luck!

The above is an extract from my extensive library of Strategy, Planning and Sourcing Process material. I take the 3 Pillars into more detail in my core material - for further information please ask

If you need help with your Three Pillars - give me a call, I'd be very pleased to assist you

I hope this is of interest and useful; please feel free to Comment, Share and Like (or shoot it down!) Please also have a look at my other posts; mostly about buying stuff, some more tongue-in-cheek

Thanks and regards

Andy

* For gweilos/gweipos: you will often see this spelled Kung hei fat choi but the yingman phonetic is closer to Gung hay fat choy - and for reference Hong Kong is more like Herng Gong

*^This really applies to most business areas

^Hence me, you and others make a living

# See my other 'Procurement Basics:' post on risk management 'The Issues with Risk Management'