Sourcing & Procurement framework for Best in Class

If you are in the exciting process of  setting up your Journey for a Best in Class Purchasing organisation , you’ll need a Vision, a structured Approach and right Priorities, namely a Sourcing & Procurement framework. I like the one presented in below chart. It splits the focus in 5 key work streams  (Organisation, content, Process, Data and Technology)  and highlighs for each of them 4 to 5 areas which are currently high in CPO agendas and to be considered as key success factors for being Best In Class (BIC):
Organization

• Separation of strategic, tactical and transactional activities > optimisation of manpower costs
• Shared / Integrated business services > Standardisation, simplification, aggregation, resource utilisation optimisation
• Global Source-to-Pay process owners > Need for an overall accountability for strong outcomes
• Governance across Procurement and Finance > Procurement shall team up with Finance to get the governance working
• Process led Source-to-Pay function > Process Compliance is key

Content

• High content coverage of spend (catalogs, contracts, preferred suppliers) > going digital…
• Utilization of externally available content > leveraging external content to enrich own
• Content creation embedded in sourcing process > Learning from past activity injected in sourcing process
• Continuous improvement embedded in spot buying > Use analytics to improve your Tail Spend Management

Process

• Category specific buying channels > Different set of channel from ‘self enabled’ (less efficient) to automated (cheapest)
• End-to-End Source to Pay process > A process designed from an End to End perspective
• Self Service Processes > Impossible to avoid that channel so better have it right
• No Po – No Pay policies > Sound obvious, still not applied in all fortune 500 companies
• Internal and external collaboration > IT enabled

Data

• Harmonized master data (Suppliers, data) > No accountability/aggregation transparency otherwise … Go Big data
• Harmonized spend / budget structure > same as above
• Centralized data repository > Centralising is a great step for harmonization
• Efficiency , Savings & Compliance measurement > the right dashboard and Analystics to ensure outcomes

Technology

• One stop shop Buying portal > Make requisitioner life easy, they’ll bring compliance up
• Integrated source-to-Pay technology > avoid duplications and saving time and effort
• Value adding mix of “in the cloud” and “on premise” technology > Not ready yet for full cloud so get a balanced system landscape
• Procurement analytics and reporting > Required for above success
• Supplier enablement technology (incl. supplier networks) > Make Supplier life easy, they’ll bring value vs  sorting out admin issues