Procurement is evolving rapidly beyond identifying preferred providers and facilitating purchasing. A recent survey of procurement leaders reported that procurement is becoming “an agile group of strategic advisors.”
So, how do you evolve your organization to take a more strategic approach?
In this article, we will look at creating a renewed focus on strategic sourcing and procurement, improving risk management, and an often-overlooked area in procurement: skills development and succession planning.
Strategic sourcing and procurement in supply chain management uses a data-driven approach to optimize procurement. It is a systematic approach to improvement that goes beyond just negotiating lower prices. Here are some of the key attributes that define strategic sourcing:
One specific strategy is conducting regular strategic spend assessments.
In the course of managing high volume, it is easy for procurement teams to focus on the next task rather than thinking about the bigger picture. Conducting strategic spend analyses regularly can help uncover additional opportunities to save money and consolidate.
By performing a thorough spend analysis across the entire institution, you can identify top categories by volume, spending levels, and cost increases. This helps to surface priority areas that need further investigation.
Within these priorities, you need to research:
This can help you set better pricing targets and uncover alternative suppliers.
E&I Cooperative Services® members can take advantage of a no-cost Strategic Spend Assessment (SSA) to compare current contracts and pricing with E&I’s broad portfolio of cooperative contracts, which helps identify immediate savings, potential for consolidation, and ways to streamline the strategic sourcing and procurement process.
A key element of strategic procurement in supply chain management is identifying and mitigating potential risks. We all saw the impact of supply chain disruptions during the pandemic, and we are still dealing with inflationary pricing.
Besides spend assessments, procurement teams need to conduct risk assessments. A proactive approach to evaluating risk can uncover supply chain vulnerabilities that could disrupt the flow of goods and services. With risk identified, you can then build redundancy into your supply chain. This might include sourcing additional providers in case primary sources cannot deliver.
Another part of risk management in higher education can borrow strategies from eCommerce. Retailers monitor inventory levels tightly, making sure they have enough safety stock on hand to overcome momentary disruptions or delays. The amount of safety stock carried will depend on evolving risk assessments.
You also need to keep an eye on the financial health of your vendors to avoid risk. Regular checks on business credit reports and financial performance can identify potential risks early. Contracts should be constructed to provide exit clauses and renegotiation windows in case of declining performance.
The job market is changing rapidly. A record 50.5 million people quit their jobs in 2022, and turnover rates were near record highs in 2023. Departures of key individuals within your procurement team can create significant challenges.
Your strategic sourcing and procurement plan should include a careful evaluation of team members to identify skill gaps that might prevent them from moving into different roles. Cross-training and upskilling ensure continuity in case key team members leave. Such an evaluation can help create a succession plan for key roles.
Not only can this help you be better prepared for changes in the future, but helping team members with career planning can improve retention and engagement.
E&I Cooperative Services can help you transition to becoming strategic sourcing and procurement experts. E&I is the only non-profit, member-owned cooperative that focuses exclusively on education. We understand the unique needs of higher education and offer tools, strategic insights, and access to diverse suppliers to help streamline your procurement process and save money.
The Cooperative’s contracts leverage the buying power of more than 6,000 member institutions to achieve greater efficiencies and negotiate terms favorable to academic institutions. Many suppliers offer exclusive incentives and rebates to E&I members.
There is no cost to become an E&I member, and no obligation. Learn more about E&I Cooperative Services and how we can help you meet your strategic sourcing and procurement goals.