Too often, Procurement organizations do not have the functional capabilities, work processes or technology needed to fully meet the objectives of the business units they support. Following is a framework to help you assess the ‘current-state’ environment of your Procurement organization and several insights for strengthening its' capabilities.

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STRENGTHEN YOUR PROCUREMENT CAPABILITIES TO
BETTER MEET THE NEEDS OF THE BUSINESS
Too often, procurement organizations do not have the functional capabilities, work processes or
technology needed to fully meet the objectives of the business units they support. There are two
common root causes for this.
1) The Business Units themselves have not sufficiently defined or communicated their objectives to the
Procurement organization.
2) The Procurement organization has an understanding of the Business objectives, but do not know
what actions they must take to help the Business be successful.
The solution to this problem requires the commitment of both Business and Procurement leaders, and
must be a priority for both organizations. The Business leaders must define and communicate their
objectives, and Procurement leaders must define the ‘future-state’ organization that is capable of
supporting the Business.
In addition to defining their ‘future-state’ requirements, Procurement leaders must also clearly
understand their ‘current-state’ environment. They can then evaluate the ‘current-state’ environment
versus the ‘future-state’ requirements to identify the improvements and changes needed to close-the-
gap between them.
A framework to help you assess the ‘current-state’ environment of your
Procurement organization:
The following Procurement Assessment Framework is a structured process, involving both business
and procurement personnel, used to fully assess the ‘current-state’ environment of your Procurement
organization.

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Procurement Assessment Key Elements
Key Element Brief Description
Procurement
Operating
Model &
Governance
Evaluate the Procurement strategy, objectives, priorities and measures of
success required to achieve desired business outcomes. Review
departmental plans, existing improvement initiatives and resources. Assess
current Procurement organizational structure and the effectiveness of the
governance processes.
Strategic
Sourcing
Assess the effectiveness of existing Source-to-Contract (S2C) practices,
policies and work processes; Spend Analysis, Business Requirements,
Market Research, Category Strategy, RFx and Contract Negotiations,
Implementation Plans, Supplier Performance Management, and Contracts
Management.
Supplier
Management
Review the effectiveness of existing Supplier Management practices,
policies and work processes: Audit and Certification, Performance
Scorecard, Risk Management, and Supplier Communications and
Relationships.
Procurement
Processes
Assess the effectiveness of existing Purchase-to-Pay (P2P) practices,
policies and work processes; PO Requisition and Approval, PO Placement,
Receipt of Goods and Services, Invoice Approval, and Payment
Processing.
Technology
& Tools
Evaluate the completeness and accuracy of procurement master data
(Vendor, Purchase Order, Material, Inventory, Contracts) and the existence
and use of analytical tools (i.e. Spend Data Management tools) and
procurement software applications (i.e. E-Procurement, Supplier
Management, Contract Management).
Leadership /
Change
Management
Examine the alignment of department goals and priorities between
Procurement and other business functions. Review existing
communications and management control systems. Determine leadership
alignment and readiness for change.
Supplier
Management
Strategic
Sourcing
Procurement
Processes
Procurement Operating Model & Governance
Leadership / Organization / Change Management
Technology
& Tools

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The Procurement Assessment provides valuable insights to strengthen
Procurement capabilities, better meeting the needs of the business
There are three valuable outcomes of the Procurement Assessment which well-positions the
organization for making needed changes.
1st
- The involvement of both procurement personnel and business stakeholders will help create buy-in
and ownership of the assessment findings. This, in turn, helps minimize resistance to the
implementation of needed changes because both stakeholders have been involved throughout.
2nd
- The assessment identifies a series of near-term improvement opportunities that can provide early
wins and savings, that will generate the enthusiasm and support needed for more significant
opportunities. In more hesitant organizations, these initial improvements will demonstrate that
visible, constructive changes can indeed be accomplished for the benefit of all.
3rd
- A longer-term roadmap and project plan is developed that defines the expected benefits, the
needed improvement actions, and the required resources and performance indicators that are
needed to achieve these more significant opportunities.
The benefits resulting from the implementation of the early-wins and the longer-term improvement
initiatives can be significant. A $1 reduction in the cost of purchased goods and services yields a $1
improvement in operating margins. Annual savings of 3-5% of total procurement spend is achievable.
Many non-monetary benefits are also realized including, better communications between the
procurement and operating teams, reduced operational delays due to material shortages, improved
supplier performance, increased value of purchased materials and services, more efficient purchasing
processes, and improved employee skills.
______________________________________________________________________________________
Change Solutions Group, LLP is a management consulting firm focused on helping clients improve the
effectiveness of their operations and supply chain organizations. We partner with our clients to
implement sustainable process and organizational changes that streamline operations, reduce costs and
improve profitability.
David McDonald can be contacted at David@ChangeSolutionsGroup.com or +1 214-240-1269.
TM
Change Solutions Group, LLP
Helping Leaders Achieve Their Vision