PROCUREMENT &

STRATEGIC SOURCING
Presented by You Exec
Procurement
Procurement involves the process of selecting
vendors, establishing payment terms, strategic
vetting, selection, the negotiation of contracts and
actual purchasing of goods. Procurement is concerned
with acquiring (procuring) all of the goods, services, and
work that is vital to an organization. Procurement is,
essentially, the overarching or umbrella term within which
purchasing can be found.
 Procurement Objectives

Support operational Manage procurement

requirements Process and supply base
efficiently

Develop strong relationships

with other groups Support organizational
in the organization goals & obejctives
 Procurement Objectives

Enhance Reduce Increase

Competitive Supplier
Advantage Cycle Times
Loyalty

Eliminate Minimize
Workaround Rogue Spend
Processes
 Vendor Management Process

Search for Monitor Performance

Potential Suppliers Remediate
Evaluate Tenders and
Select Supplier

Define
Requirements

Exit, Terminate, Renew,

Conduct Procurement Tender Negotiation and Contract Renegotiate
 Supply Chain Management KPI
Cost of Purchase Order
Cost Reduction Cost Savings & Cost Avoidance $ 12.14
Transitors - $10 Switches

Switches - $10 Display

5 Year Trend This Year

Savings
$10 Transitors
Sensors -$15
$10 Other
Battery - $05
Sensors
$40 Cost Reduction
Display - $20 Battery $ 12.14
$15 Other -$40
0 5 10 15 20 25 30 35 40

$5 Switches
Display
5 Year Trend This Year

Avoidance
$20
Transitors
Other
Cost Savings
Sensors
Battery
$ 12.14
Procurement ROI 0 20 40 60 80 100

(Cost of Procurement: $50,414) 5 Year Trend This Year

100
Top 5 Supplier by Cost Reduction
90
Cost Avoidance
80 Supplier 01 $20,434
70
$ 12.14
60 Supplier 02 $32,665
50
Supplier 03 $24,676 5 Year Trend This Year
40
30
Supplier 04 $12,525
20 Procurement ROI
10 Supplier 05 $23,676 $ 12.14
0
Battery Display Other Sensor Swiches Transitors Supplier 06 $20,575
ROI Benchmark 5 Year Trend This Year
 Quarterly Procurement Map

Kick-Off Data Consultant Roadmap Roadmap Senior Mgmt Final Program Roadmap
Workshop Capture Analysis Workshop Review Presentation Workshop Implementation

Quarter 1 Quarter 2 Quarter 3 Quarter 4

• Background • Data Analytics • Documentatio • Single Council • Preparation Of • PresentationtTo • Brining • Regular
• Process Pack n Review • Review Analysis Roadmaps Senior Together Reviews of
Overview • Capability • Opportunity Findings • Distribution to • Management Participating Roadmap
• Text Here Assessment Analysis • Validate Key Team Councils Progress
What it is

• Text Here • Stakeholder • Spend Analysis Opportunities Stakeholders • Text Here • Sharing of • Tracking at 6,12
Questionnaire • Best Practice • Draft Strategy For Review • Text Here Roadmaps, and 24 Monthly
• Text Here Comparison And Roadmap • Text Here Issues And Reviews
• Text Here • Text Here Opportunities
• Identification of
Collaboration
Opportunities

• All Council • Council Project • Text Here • Council Project • Council Project • Project Leaders • All Council • All Council
Who attends

Project Team • Text Here Team Team • GM and Senior Project Project Team
Leaders/ Teams • Key Council • Text Here • Key Council • Key Council Management Leader/Team • Key Council
• Text Here Stakeholders Stakeholders Stakeholders Team • Key Council Stakeholders
• Text Here • Text Here • Text Here • PMMS • Text Here Stakeholders
Support • Text Here
 Procurement vs. Strategic Sourcing

Strategic Sourcing focuses longer-term

Traditional procurement focuses on relationships with suppliers that offer quality,

finding the lowest-cost suppliers. value, a willingness to collaborate and the

flexibility to meet changing supply requirements.
 Stages of Strategic Sourcing

Procurement Develop
1 Plan
3 Strategy
This approach to procurement uses
structured and market-oriented processes
to collect data, perform quantitative
analyses, and apply qualitative expert
opinions. The goal is to guarantee the
best value for money in purchasing.

Create
2 Profile
 Stages of Strategic Sourcing (Cont.)

Supplier Selection Review &

5 & Negotiation
7 Improvement Measures

Requirements &
4 6 Implementation
Evaluation Criteria
 Strategic Sourcing Process

Collect and Analyze Data Evaluate & Select Suppliers Implement

Procurement Develop Requirements & Supplier selection Review & improvement

Create profile Implementation
plan strategy evaluation criteria & negotiation measures