Built to Last: Designing a Procurement Transformation Program Part 2 – Procurement Transformation Architecture
In the previous blog we discussed how organizations can bring about procurement transformation by driving the change from within the department and some key principles around which the transformation exercise should be built.
In this blog, we will focus on the architecture for procurement transformation.
Where a transformation program begins will depend upon the unique current state of procurement operations and organization priorities. For instance, the organization may have experienced erosion in quality which may drive procurement to begin its transformation with supplier management systems and programs.
While there’s no single plan to achieve best-in-class performance, the transformation program should ultimately grow to include the collection of solutions discusses below.
- Spend Analysis – the visibility into a variety of source-to-settle aspects, among them spend, suppliers, and process, that results from a spend analysis effort remains a critical step in driving a successful procurement transformation. The data culled from spend analysis can help procurement better identify opportunities and expand its influence.
- eSourcing – strategic sourcing is a primary driver of savings for most procurement departments. Since savings remain the top procurement performance metric, no procurement transformation can be complete without investing in a robust eSourcing program.
- Contract Management – even top performing procurement teams need to improve their contract compliance. Poor contract compliance results in savings leakage and legal/financial risks. Contract management solutions can resolve these issues by ensuring organization spend is in line with the pricing and terms of the negotiated contract.
- Supplier Performance and Information Management – procurement transformation should also focus on key trading partners and the activities that occur outside the organization. Measuring and understanding supplier performance and managing supplier information can help organization build better supplier relationship and, find and contract with highest-value suppliers.
In the next blog, last in the series we will talk about the other three solutions necessary for bringing about a successful procurement transformation.
For more information on procurement transformation, you can access the research report by Ardent Partners by clicking the download button below- Built to Last: Designing a Procurement Transformation Program for Best-in-Class Performance
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