Procurement Transformation

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Here is everything you need to know about Procurement Transformation

The world is going through a turbulent phase. Given the unwanted situation, the importance of efficient procurement for businesses has increased manifold. Because of this, procurement transformation, a relatively new-age concept, is gaining traction amongst small and big companies alike.

Procurement transformation is a hot topic for all organizations, and they are looking to rework their operations to optimize the value derived. It is not something that requires expertIse, but it is more of a mindset and requires dedication. The process is unique for every company and requires a different approach every time, but the underlying principles and best practices remain the same.

Similar to how the implementation varies from one organization to another, the scope differs too. Once you consider your benefits from a particular strategy and your objectives, you can then set out to decide the range of your endeavors.

It will help you and your team to demarcate the items to be covered and the requisite time frame to achieve the same. It would also help you assess the cost angle and forward the same to the higher management for approval.

The scope covers these –

What forms the part of procurement transformation?
What to exclude from your procurement transformation processes?

Definition of Procurement Transformation

Given the impetus on efficient procurement in the current scenario, it is imperative for companies to look for optimizing their tactics.

Procurement transformation refers to a type of change management focusing on establishing long-term improvements for the organization’s procurement and supply management processes, activities, and relationships.
Procurement transformation relies on applying various tools and techniques to impact areas such as extending, sustaining, and renewing cost control, launching and speeding up cost control, and several others.

The Three-Phase Procurement Transformation Process

Procurement transformation is not a one-off project that your workforce pulls off. It is instead a mindset to improve consistently and better your previous stats. Here is a three-phase procurement transformation most companies can follow –

1. Tactical

Top management of most organizations is of a view that procurement is a tactical process. So, they request their procurement team to juggle between manual processes continually. While it is right to an extent, the new-age procurement transformation imbibes a whole different approach.

To initiate the transformation phase, the procurement department should first establish and understand its relationship with other business units. The next step is to bring them all together and speak a common language.
You may need a consultant to make procurement the center of profits and attraction. It can then shift to a more strategic role where your workforce makes purchases based on a sound strategy. The switch will bear fruits over time and result in cost reduction, flexibility, and higher operational efficiency.

2. Operational

Once you have set up the tactical viewpoint, procurement transformation will have some leeway to explore and make changes. Even though your workforce understands its worth, trying to develop it from a tactical to an operational move will require time and patience.

The management can benefit from the reputation it has created and opt for massive up-scaling. The top people can hire the right resources and give them the requisite power to ensure it spreads its wings and blossoms.
A capable CPO will help it build and expand both internally and externally. Because of their name attached to the process, targeted transformations soon become a reality.

3. Strategic

Very few organizations can imbibe procurement transformation as the core of their business. These are those embracing strategic sourcing successfully. They understand that it is not a one-off thing and are committed to practicing it vehemently over time. Instead of seeing it as a separate process, it is more of an implicit practice that keeps them going.

Strategic transformation can help them establish high tracking and reporting standards, helping other business units evolve.
It also involves figuring out areas requiring immediate attention and those that can be excluded. It ensures a holistic approach and makes transformation a habit rather than a necessity.

Set on a Procurement Transformation Voyage With Moglix

Procurement transformation is about acting mature and looking beyond facts and figures. Instead of aiming for being the best-in-class, it envisages being better than what you were yesterday. It is more about making it a part of your culture in a way that you don’t even need to talk about it.

At Moglix, we help organizations set up procurement transformation and practice it conveniently.

Click here to contact our team of experts today!