A procurement strategy is essential when assessing the direction of a public entity, like state and local government agencies, educational institutions, and non-profit organizations – all of which face expense pressures and tight budgets.Implementing a comprehensive procurement strategy helps procurement staff to handle their diverse range of responsibilities and acts as a guide for the organization’s long-term goals and action plans. There are many types of procurement strategies, with organizations typically focusing on cost reduction, risk mitigation, and leveraging supplier relationships. However, a successful procurement strategy should be an organization-wide process that is tailored to meet the needs of an agency.
4 Keys to Building a Successful Procurement Strategy
The success of any procurement strategy lies within the following key elements that are necessary to provide a public entity with everything needed to meet its goals and serve constituents:
|Analyze Organizational Spend
Identifying and gathering data on an organization’s spend can gain visibility that results in decreased procurement costs, improved efficiencies, and the ability to forecast spend. This data needs to be acquired from internal stakeholders, suppliers, and all other parties who are involved in the procurement process.
|Determine Internal Needs
In order to gain full insight, an exploration of an agency’s needs is necessary in order to formulate a strategy for the future. In doing so, the agency can translate this into direction and requirements, setting targets for what needs to be procured.
|Assess External Market Conditions
Once an internal analysis has been completed, it only makes sense to look externally at the global marketplace in which suppliers conduct business. Conducting a supplier market analysis to identify industry trends will help agencies better understand the industry and suppliers who may best meet the internal needs identified above. In the long term, this will help to mitigate risk and result in stronger sourcing events.
|Implement a Sourcing Process
After all the necessary research and data analysis has been conducted, a sourcing process can be established. A sourcing process will allow an organization to understand internal goals and external conditions while building a competitive supplier base with the objectives of stakeholders in mind.
Cooperative Purchasing: Today’s Contracting Strategy, Yesterday’s Purchasing Tool
Cooperative purchasing as we know it in today’s world has extended far beyond the simple purchasing tool it was traditionally used as. It is now a procurement best practice when it comes to strategic planning. Reducing costs and administrative burdens while providing contract compliance are just a few of the benefits you can see from cooperatives.
Procurement professionals are becoming more strategic with their buying process through cooperative purchasing. The urgency to free up time-consuming tasks, such as the need to manage multiple new competitive bids, has resulted in procurement staff using an already solicited cooperative contract to procure goods and services, saving them time to work on more strategic procurement events and providing more value.
Want to read more about how cooperative purchasing can develop an effective procurement strategy?