I was always thinking how to really understand the specific need of your particular company, and how to develop the Procurement approach which will suit your company in the best way. And I think I have found the answer to my question in a recent discussion with André Bohems. He used the term ” DNA of the company”.
Every single company has its own DNA. Even the closest competitors who are operating in the same field with similar product or services are still different. And Procurement department has to build its own approach based on the company’s DNA.
If you compare the Telecom companies with pharmaceutical company or manufacturing company – theoretically their Procurement processes are the same. Meaning that they all do spend analysis, market trends, developing the strategies and action plans… But once again, every company has its own DNA. And Procurement Department should recognize it and build its own objectives based on that DNA.
For example in the Telecom world the level of investment in capex can be much more comparing to biopharmaceutical world. And it is simply because in biopharmaceutical world once you set up the production line you have to produce and maintain the operation on good level.
While in the Telecom world – investments are far more frequent. You know that you will invest every year. So the speed of decision taking and Procurement contracts needs to be much higher. Moreover the volatility of the customer is much higher in telecom comparing to biopharmaceutical business. Which also has the direct impact on the Procurement strategy and operations.
Life cycle of the products are also different. And many other factors: competition on the market, regulations and legal demands… All those aspects are defining your Procurement DNA!
How to understand your Procurement DNA?
In order to understand your company’s DNA and the DNA of your Procurement department you need to start with companies Mission, Vision and Strategy. Hopefully they exist in the company you are working for 🙂
The next step is to think about delivering the real value.
Ask yourself a question: How does the company get its margins? And then think how can Procurement increase margins (keeping the full respect to the risk management)?
If you start with this task as a Cornerstone – the other questions will be answered quite easily. And also the other tasks for Procurement Department will become more obvious.
Also the important task will be to understand the internal organization and relationship between different departments in side the company. And of course to answer a basic question: what is the value that Procurement can provide to the company?
Make your internal Customers happy!
Good KPI to measure success of the project and your Procurement strategy – is satisfaction of your internal customers. As simple as that!
This is the best model of the partnership: win-win situation if you want. If you are doing your Procurement job well – then your internal customers should be happy and satisfied! And if on top of that your suppliers are satisfied – then risks are also handled in the good way!
So next time when you want to measure the success of your project or some particular activities of your Procurement department – don’t do it by yourself. Better ask the internal customers (and suppliers) – are THEY satisfied was the result?
And are they happy?..
P.S. Get in touch with André Bohems in LinkedIn
P.P.S. And don’t forget to listen to the full interview!
Procurement expert and coach at Future Procurement
You can learn more about Procurement and Supply Chain Management at our web-site www.futureprocurement.net