Pick Me For Value!

Pick Me For Value!

As a child I never considered myself an athlete. I was the last to be picked for a football team and it was only to even the sides. My favourite position was “Last Stopper” as it allowed me time to catch my breath whilst play was in the opponents half. What I lacked in the athletic department I made it up with determination, passion and a tinge of aggression. Admittedly, I was caught by the fancy footwork of the star striker and 99% of the time the ball would have passed me but not the striker. Over the years my strategic confusion over American style football and football/soccer ensured that I was high up in the selection process. But for all the progress I have made in the athletic department, my professional career seems to be a constant repeat of my early years. As a Procurement professional I am constantly picked last for “Team Value “within the organization. Accountants, Engineers, Project Managers and Lawyers are often selected first with no consideration for the value that Procurement can add. This may be as a result of the 50 year relationship of Procurement subordinately reporting to Finance, and the head of finance is required to speak on Procurement’s behalf. In my opinion this has not worked. Today we have professionals trained in Procurement and Supply Chain management, the time has come for Procurement to represent itself at the higher levels of management.

As the country awaits the address of the Prime Minister on her government’s handling of the economy given the falling oil prices, arguably a typical Finance oriented approach cutting expenditure will be adopted. However a Procurement approach to this scenario will provide better results. This approach will involve the implementation of procurement strategies that can result in significant savings and prudent management of the nations’ resources.

One Procurement strategy that can be implemented is Category Management, which is a collaborative process applied by the procurement function that helps to shape and define the business requirements against the external supply market to deliver effective and cost-efficient solutions quickly. it is the practice of segmenting the main areas of organizational spend on bought-in goods and services into discrete groups of products and services according to product, geography, value or risk. The key outcomes of applying category management are:

Value Creation: Ensuring that the country gets value for money by getting high quality goods and services in a cost effective manner through effective sourcing processes and contract negotiation

Value Addition: Partnering with both internal and external stakeholders/business partners to deliver innovative and premium solutions to the country through effective stakeholder engagement and benchmarking

Value Protection: Partnering with both internal and external stakeholders to avoid erosion of profit, maintain the highest ethical standards and minimize potential risks to the country through effective contracting and implementation of best practice procurement.

The benefits are as follows:

  1. Identification and segmentation of spend into categories.
  2. In-depth research of the category to produce the market structure.
  3. Develop better relationships with suppliers
  4. Savings in the vicinity of 10 -30%
  5. Ability to add value to the organization
  6. Is in line with the strategic goals of the organization.
  7. Increases the profile of the Procurement Function move from operational to more strategic.
  8. Better management and delivery of objectives through setting of targets and provision of feedback “closing the loop”
  9. Data presented to stakeholders ensures buy in to results.

Let’s look at a working example for fiscal year 2014 as per Draft Estimates the Ministry of National Security was allocated $76,454,040.00 for the purchase of vehicles. Applying a Category Management approach to this spend using a conservative percentage of 15% will result in savings of $11,468,106.00.

This represents a significant sum that can be redirected to other areas of expenditure. reddit ask women This is just one Procurement Strategy applied to one category from one Ministry, just imagine if Category Management was applied to the entire allocation for goods and services and minor equipment. Madame Prime Minister in light of the above shouldn’t you pick me, a Procurement Professional, first for “Team Value”?

Written by Vaughn Rondon, MCIPS, President CAPP

Vaughn-rondon

 

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