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How to develop a procurement strategy in six steps?

We share six steps to develop a successful procurement strategy, from start to finish.

How to develop your procurement strategy

A strategy is a plan of action that is designed to achieve a long-term aim or objective. A procurement strategy typically takes 2-5 years to develop, so ensuring you get it right from the off will help to mitigate any risk. To ensure the strategy is successful you need to consider:

Stakeholders are properly engaged in developing the strategy.
Understand the industry and business context that the function will operate in.
Confirm the metrics that will be used to measure progress/success.
Confirm the scope of services/capabilities required to deliver these outcomes

The six steps for a successful procurement strategy

We share six key areas, that incorporate the four things mentioned above to help you develop your strategy. These six areas are:

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1. Business context

Scope out your competitors. What are they doing? Where do you sit in the marketplace compared to them? When you understand your market, you’ll help to improve perception by creating more value for your customers. Decide if you want to support growth, reduce cost, or drive innovation.

Industry insights
Business strategy
Business structure
Business culture

2. Stakeholder engagement

Discussing your procurement strategy in the right ways with the wider organisation and stakeholders can help ensure you haven’t missed anyone out. You need to understand who the stakeholders are and deal with any concerns they may have. A successful strategy requires a collection agreement between:

Executive team
Functional heads
Whole organisation
External stakeholders

3. Vision

It’s important that you have a clear vision of what you wish to achieve. Do you want to cut down waste by 80%? Are you looking to cut costs? This vision should be a clear statement for current and future decisions. As early as possible, clarify and define what success looks like to your organisation, identify:

Goals
Approach
Scope of Remit

5. Plan

A strategy cannot be implemented without a plan. Think about the long-term view and break your strategy down into logical steps. Such as technology, process, people and data and any limitations that may arise. A typical procurement strategy takes 2-5 years, so ensuring the right timelines are in place is essential.

Overall timelines
Developing workstreams
Creation

6. Performance

There are many different performance metrics to think about when developing your procurement strategy. The key is to think about the difference between metrics that measure efficiency and those that measure any strategic outcomes you want to achieve. The most common framework is using a balanced scorecard which assess performance in the below four areas.

Commercial
Risk
Spend Control
Supplier Management

What is procurement?

Procurement involves the buying of goods and services that enables an organisation to operate their supply chains, in a profitable and ethical manner. Explore deeper into how procurement is defined, the role it plays and a how a career in procurement can benefit you.

Procurement strategy Market Analysis Strategy implementation Make or buy

Brexit Porters Five Forces Procurement KPIs

Become a CIPS member

Achieve your potential by becoming a member today. Whether you want to become a studying member or want to upgrade your membership to MCIPS, you’ll receive support and guidance whatever career level you’re at.

Access the latest research, whitepapers and tools across a range of key procurement and supply topics.

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Expand your value creation skills

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Procurement Skills Training

Accelerate your learning and keep your knowledge and expertise up to date with our Value Creation training courses.

VALUE CREATION TRAINING

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How to develop a procurement strategy in six steps?

How to develop your procurement strategy

The six steps for a successful procurement strategy

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1. Business context

2. Stakeholder engagement

3. Vision

4. Procurement capabilities

5. Plan

6. Performance

Procurement strategy key themes

Access the latest research, whitepapers and tools across a range of key procurement and supply topics.

Expand your value creation skills

Procurement Skills Training

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