Strategic procurement is a company-wide process. It requires input from all departments and functional areas of a company. For this reason, Bross Consulting Engineers always assembles interdisciplinary teams in procurement projects. These procurement teams consist of representatives from the most important core processes. These teams set the overall direction for procurement, aligned with the business strategy. The goal of the teams is to develop and implement a strategic procurement concept.
How do you create a strategic sourcing concept?
When creating a strategic procurement concept, Bross proceed in several steps.
Step 1: Make-or-buy decision
First, the current procurement performance is subjected to a potential analysis and weak points are identified. Basically must be decided thereby between the two alternatives own production and external production, why building groups and raw materials are submitted to a Benchmark. The benchmark is intended to confirm the purchase or manufacture of goods or even to identify potential savings. This make-or-buy decision must be continuously scrutinized and commodity groups constantly re-evaluated. Changes in the company’s own cost structure or changes in sales can lead to products increasing in manufacturing costs and being purchased more favorably on the market.
Step 2: Competence assessment
In strategic sourcing decisions, the competence of the company must be considered in addition to the purchase price. It may be, for example, that a company does not want to outsource parts due to security aspects or the loss of know-how. Other reasons that speak against outsourcing are unique selling propositions or company policy decisions. All other parts should always be up for disposal in order to achieve maximum profitability.
Step 3: Supplier screening
In the third step, potential new suppliers are researched by the strategic procurement teams. For example, potential countries that are viable sources for the required raw materials, components, finished goods or services are scrutinized. If there are specific requirements, this may limit the number of suitable countries.
Resilient supply chains for uninterrupted supply
It is important for a company to choose suppliers carefully. A supplier’s inability to perform can result in significant losses to the company. The supplier’s business reputation and performance must be evaluated, and financial statements, credit reports and references must be carefully checked. If possible, the company should arrange to visit the supplier’s site and speak with other customers about their experiences with the supplier. Using agents who are familiar with the markets and stakeholders can also be beneficial to this process. Companies can select more than one supplier to avoid potential supply disruptions and create a competitive environment. This strategy is also effective for large multinationals and allows for centralized control but more regional deployment. Bross will be happy to show you which possible procurement strategy is right for you in a free, no-obligation consultation.