This document discusses strategies for optimizing procurement processes. It recommends evaluating scoring opportunities in procurement and benchmarking against external competitors. Specific strategies proposed include opportunity assessment, cost optimization of goods and expenses, performance management, and fostering innovation through supplier collaboration. The goal is to position the procurement team as strategic business partners that maximize returns through competitive intelligence and process improvements.

1. Presented to:
By:
Procurement Intelligence –
Priming Procurement Leaders for
Business Power Play
Indian Institute of Materials Management
Valekumar Krishnan

2. Current state and Pressures
The coach and management
think we are not exploiting all
scoring areas while batting
The competition is ahead of us
identifying new opportunities
and executing plans
We are conceding more runs
per wicket
Our field setting is not
complementing our bowling
strategy
2

3. 3
Evaluate best scoring
options and implement
them successfully
Ensure maximum
returns and minimize
loose shots
Monitor evolution of the game, analyze
external innovation and adapt successful
practices
Quick
Wins
Opportunity
Assessment
External
Benchmarking
Batting Strategies

4. 4
Bowling Strategy – Power Play
COGS, SG&A Optimization

5. External Benchmarking
Procurement
Organization
Procurement metrics
& Peer Benchmarks
Supply Market
Established and
emerging players
Capacity trends
Consolidation &
Fragmentation
trends
Consolidation &
Fragmentation
trends
Differentiation
& Innovation
Risk Mapping
Competitor
activity
Supplier
Engagements
Innovative
Remuneration
Models
Contract Best
Practices
Backward integration
Supply base
rationalization
Price
Price Trends &
Forecasting
Price Driver Analysis
Cost Modeling
Visibility
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6. Opportunity Assessment
6
External Market Intelligence
Internal Spend, Supplier and Category
Information
Opportunity Identification & Evaluation
In-depth category information aids faster decision making and improved speed to market
Mitigation strategy for category roadblocks
Identify and incorporate category best practices from peers
Arriving at cost savings target and execution roadmap
Enabling better SRM measures through standardization of KPIs
Typical Benefits of Opportunity Assessment

7. Internal Opportunities External Opportunities
Internal and External
Opportunities
Quick Wins Long Term
Reduction
potential
Time to achieve reduction
Low
High
High
Low
Integration of
Brand Agency Team
SOW
reconciliations
Administrative
Tools
Agency Staff
Onsite
E-auctions
Production
consolidation
Agency Review
Agency Staff Plan
Evaluation
In-house Agency /
Freelancers
Agency
Consolidation
Opportunity Grid – Sample
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8. COGS/SG&A Optimization
Payables to
Revenue Ratio
Inventory to
Revenue Ratio
COGS as a
Percentage of
Revenue
Purchase Price
Variance
Transition
Procurement generates significant bottom-line benefits through negotiations, value chain optimization, and
innovation, which can not be measured using Purchase Price variance. COGS, Inventory & Payables ratios
will provide a better picture of procurement’s performance vis-à-vis competition.
Continuous tracking of cost structure, capacity levels and supplier
financial performance at category and spend pool levels enables
identification of opportunities as they arise
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9. Bowling Strategy – Middle Overs
Cost Avoidance / Cost
Reduction as % of
total spend
Order Fill
Rate
Maverick Spend
Percentage
Spend per
Procurement
FTE
Managed
Spend Under
Contract
Number of buyer generated
quality problems
Number of make/buy
decisions with
procurement’s involvement
Innovative ideas
introduced by
suppliers
Procurement
Contribution to
Product Development
PPV
Procurement Performance Management
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10. Innovation
Cost
Supply, Quality, Regulations
Process and Product
Re-engineering
Risk Management
Supplier
Collaboration/
Strategic Partnership
Increased Speed to
market
The future State – Collaborative & Insightful
Business partner
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