Five Keys to Transforming Your Procurement Organization Into a Strategic Force

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Five Keys to Transforming Your Procurement Organization into a Strategic Force Top procurement executives share their views on evolving procurement from transactional to strategic

A SAS White Paper

Table of Contents
Executive summary ....................................................................................................... 1 There’s no status in the status quo ............................................................................. 2 What does it mean to be strategic? ............................................................................. 3 Four stages of procurement maturity ........................................................................... 3 Establish a cohesive purchasing function.................................................................. 5 Establish central governance ....................................................................................... 5 Develop strong people ................................................................................................. 6 Consolidate the supply base ........................................................................................ 7 Correlate suppliers’ business with their rankings......................................................... 8 Treat suppliers as allies, not adversaries..................................................................... 8 Consider outsourcing, with caution .............................................................................. 9 Gain a big-picture perspective ................................................................................... 10 Know your total spend and use it to your advantage................................................. 10 Look beyond price...................................................................................................... 11 Go global with the supply base .................................................................................. 11 Engage with internal customers early in the process ............................................. 12 Trade in a control mentality for a service mentality ................................................... 12 Earn buy-in from the top levels of the organization................................................. 13 Show value with credible metrics and competitive differentiation.............................. 13 Secure buy-in wherever you need it .......................................................................... 14 Implement the technology to make it possible......................................................... 14 Get legacy systems to contribute to strategic intelligence ......................................... 15 Improve data quality................................................................................................... 15 Use analytics to transform transactional data into intelligence .................................. 16 Closing thoughts ......................................................................................................... 17

Five Keys to Transforming Your Procurement Organization

Executive summary
In the second half of 2003, top purchasing executives from dozens of private- and public-sector organizations convened for SAS and IBM cosponsored forums on the changing role of procurement. All-day roundtable sessions were hosted in five major U.S. cities: Washington, San Francisco, Houston, Chicago and New York City. The participants represented a broad range of industries and markets — from medical to military, package delivery to police protection — but they shared a common interest in evolving procurement into a more strategic function within their respective organizations. By most definitions, “strategic” is easy to say and hard to achieve or measure. Participants agreed that if the following characteristics were in place, a company could claim to practice strategic procurement. • Procurement is proactive, not just reacting to problems tossed over...
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