Eight Steps to Creating Procurement Excellence

Noor  Al Rashedi
Is your organisation’s procurement strategy an enabler for successful KSA project delivery?

Across the globe, we’re seeing procurement shift from its traditional operational position into the strategic domain—creating real value. Here in KSA, we’re beginning to move towards this more mature procurement function, one that will support Vision 2030’s challenging infrastructure and giga-project plans. It’s great news—procurement moving away from its stereotypical ‘barrier’ reputation and taking its place as part of the business case, as an enabler to delivery.

Professional standards

We can expect to see a higher profile for the Chartered Institute of Procurement & Supply (CIPS) in the KSA region. Championing global procurement and supply management standards, CIPS already has a thriving presence in UAE, where the annual CIPS Middle East Supply Management Awards were held in June. My own chartership and long-term involvement with CIPS has enabled me to get the best possible results for clients, and I welcome the prospect of this professional standard in KSA’s demanding construction market.

What next?

Meanwhile, what can client organisations do to add value at each stage of the procurement journey? I propose the following eight steps as a starting point—acknowledging that while a strategic approach is ideally started at project inception, it’s never too late to benefit.

The eight steps

1. Define the procurement strategy

Devise a clear procurement strategy for your organisation, with a view on total spend, measurable future targets, strategic sourcing, and potential adoption of category management. This is a high-level view, and defines how to engage with, and be perceived by, the market. Consider the role of digital strategies.

2. Engagement and change management

Explore the ways in which your organisation will invest in the strategic procurement process—with time and commitment, not just a budget. Engagement at senior and strategic level will ensure optimised procurement. This visible commitment at the highest level will build credibility for the improved procurement strategy, encouraging the new approach to permeate your organisation.

3. Process, policy and risk

Define processes and policies to govern procurement activities, risk management guidelines and mandatory requirements. Many government entities are involved in KSA giga- and mega-projects, and their governance requirements are paramount. Explore global best practice ways of replicating your organisation’s governance requirements in the procurement strategy. Governance processes should be as streamlined as possible, but must be demonstrable during audit.

4. People, skills and training

Consider your organisation’s skills development programme in category management, strategic sourcing and supplier relationship management. Plan for skills that support strategic rather than transactional procurement—will your current programme/project leave a legacy of best procurement practice, where lessons learned are captured and utilised on future projects?

5. Category management

This approach assesses materials and services collectively, assigning them to standard categories to maximise economies of scale and to gain efficiencies from the procurement effort. This might be done across a portfolio with higher volume and more complex parameters. It’s especially relevant in KSA, where each project is competing for finite materials, services and resource.

6. Supplier relationship management (SRM)

This gets missed in a transactional approach. Properly defined and planned management of suppliers, with engagement in the relationship, maximises value. They may be able to engage in early design, for instance, or offer cost value engineering. A formal SRM plan may not be necessary with every supplier, but needs exploring to identify where the benefits lie.

7. Measurement, reporting and tracking

It’s vital to implement a well-defined and agreed set of time, cost and quality metrics and measures (both quantitative and qualitative) to track procurement and supply chain performance and progress, including delivery of savings.

8. Technology and digital transformation

Technology can be used in innovative ways to improve procurement performance and efficiency. How can your organisation automate its source-to-contract cycle? Are you taking advantage of digital methods of intelligence gathering, and using that data to inform your future procurement strategy?

I’d like to invite you to take action, by asking yourself the following questions:

  • Where do you see your organisation in its procurement journey?
  • Which of the above eight steps resonates most with you?
  • Which steps do you need most help with?
  • What will you work on right now?

Procurement maturity assessment

If you would like to explore how a procurement maturity assessment could help you by identifying your organisation’s current position, analysing strengths and highlighting opportunities for transformation, then try our free assessment model at www.fgould.com/maturity

We believe that organisations with critical projects to deliver will benefit from stronger, smarter procurement principles, and sharing our expertise is part of the solution.

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