Procurement Glossary & Terminologies

What is Procurement Optimisation ?

Instead of using an individual strategy, procurement optimisation uses a comprehensive strategy which describes maximising value production through people, processes, and technology. Initial scoping, data gathering and analysis, improvement, and implementation, and follow-up and monitoring are also parts of procurement optimisation strategy.

Understanding Procurement Optimisation

The procurement job goes beyond the notion that acquiring products and services to meet internal needs is its primary duty. A world-class procurement process aims to improve the entire procedure to increase productivity and produce considerable commercial value. The benefits of procurement optimisation are numerous, and your firm gains significantly from it. It guarantees procurement process efficiency, which has a good knock-on effect throughout your entire firm.

Because the procurement process affects every organisational function and directly affects revenue, it is crucial to maintain the process’ efficiency by frequently assessing what’s working well and what might need to be optimised.

Steps for Procurement Optimisation

The following six areas are crucial for businesses to optimize their P2P operations:

1. Information/Insight/Intelligence

Data are where it all starts. It would help if you had a firm grasp of analytics and data. The basis of any successful procurement organisation is high-quality data.

2. Strategy/Policy

A stated policy must be set to guarantee that your procurement group is strategic in its sourcing activities. The entire organisation must accept this policy cross-functionally.

3. People/Culture

Are you adequately staffed and have the right people in the correct places? To find any gaps or overlaps in these resources, it’s crucial to examine skill levels and review personnel competence levels.

4. Process/Organisation

Examine the procurement function’s organisational structure and functional design in great detail. People, processes, and technology must all be in harmony to maximise efficiency.

5. Adoption of technology

This covers using payment cards, P2P automation, and e-commerce initiatives. By reducing paperwork, accelerating contract fulfillment, and monitoring compliance, an efficient e-procurement system can significantly increase process efficiencies.

6. Controls and Monitoring

To calculate ROI, organisations must find means to track and evaluate these activities. This ROI should be compared to the company’s goals to motivate cost control, revenue growth, and performance metric monitoring.