10 steps to procurement excellence
How did KNect365 take its procurement performance from ‘basic’ to signing off £5.8m in annualised savings in just six months?
In 2015, Efficio rated KNect365’s procurement performance as ‘basic’ and placed it in the lower quartile of rankings. In order to journey from that baseline to world class by 2018 and beyond, it followed these 10 steps:
Have a clear procurement strategy with a view on total spend, measurable future targets, adoption of category management and strategic sourcing.
Centre of Excellence for procurement to set up policy/guidance, lead procurement on indirects, with regional hubs to lead execution and monitor.
3. People, skills and training:
Conduct a skills development and enhancement programme in category planning, strategic sourcing and supplier relationship management (SRM).
4. Category planning:
Adopt an annual planning process showing clear savings and value delivery plan.
5. Strategic sourcing:
Across all categories by cross-divisional/cross-functional teams with an enhanced and common methodology.
6. Supplier relationship management:
SRM methodology to be defined and implemented on categories and executed by cross-divisional or divisional teams (where the spend is specific to that division).
7. Measurement, reporting and tracking:
Have in place a well-defined and agreed set of metrics and measures to track procurement performance and progress, including delivery of savings.
8. Engagement and change management:
Engage at a senior and strategic level to ensure optimised application of the strategic sourcing process.
9. Process, policy and risk:
Jointly define processes and policies to govern procurement activities, risk management guidelines and mandatory requirements.
10. Technology and insight:
Ensure the entire source-to-contract cycle is supported by technology and able to provide real-time, accurate spend and contract visibility, and proactive compliance.
Procurement for the future
The strategy put in place by Efficio began to garner results almost immediately. The new team has already signed off £5.8m in annualised savings, identified significant future opportunities and established itself as a well-organised and professional procurement service exceeding all expectations.