Cost Out – Value In

A Procurement Done Right functions of today needs to balance the instituted cost focus with possibilities to leverage the supplier base to add value. A Category Management approach is a proven methodology to use for cross-functional teams to address spend categories with the objective to optimize cost. A more collaborative approach with Supplier Relationship Management is a great way to balance the cost focus with possibilities to drive improvements and encourage innovation.

Category Management – As a method to take out cost

Good is to have defined categories and established cross-functional category teams that work proactively to optimize cost with documented category strategies. Great is to have deep analytical capabilities and consistently work to understand underlying cost drivers, create comprehensive scenario planning and to create long-term category strategies.

Supplier Relationship Management (SRM) – As a method to drive supplier innovation

Good is to have defined the SRM process and detailed how to transition suppliers in and out as well as establishing a supplier segmentation that governs how supplier performance is followed and feedbacked. Great is to have built a portfolio of strategic suppliers that in different ways are integrated in projects and processes with common goals. “Done right, it’s a systematic approach to supply chain collaboration that enhances the business performance of both customers and supplier.”