Why procurement matters?
Procurement is the professional management of an organisations’ external expenditure on goods and services, or non-pay spend. Procurement is a core business competence and one of the key drivers of profitability.
Having an effective procurement capability to manage spend, suppliers and contracts, provides significant benefits to an organisation, such as;
- Improved service
- Improved quality
- Access to best suppliers, (and prevent competitors’ access to the best suppliers)!
- Improved supplier relationships
- Lower supply risk/Lower supplier financial risk
- Lower stock/increased availability
- Innovation in product/service
As a business matures, growth slows, costs increase, and margin is squeezed. Procurement becomes more and more important.
Procurement is the biggest lever for profit improvement. Every £/$ saved is a £/$ that hits the bottom-line. Cost reduction has a more direct profit impact than increasing revenue!
Depending upon sector, this external expenditure can account for up to 70% of an organisation’s costs, but procurement is often under-developed and under-leveraged;
- Spend not managed by professional procurement resources
- No focus on indirect spend
- Spend dispersed across functions and business units with no co-ordinated leverage
- Transactional – just focused on placing orders
- Static supply-base - lack of competitive sourcing
- Lack of investment in processes, systems and tools
- Limited procurement capacity, capability and expertise
As a result, there is significant profit improvement potential that can be realised through a programme of procurement cost reduction and functional transformation.
Procura Procurement consultants help to identify, deliver and maintain cost savings through procurement excellence. The savings they achieve have a direct and immediate impact on our client’s bottom-line, increasing profits and adding lasting value to their business.
Procura Procurement consultants use the latest approaches, proprietary tools and methodology to address every aspect of spend and are experienced in optimising all areas of procurement, including direct and indirect spend and capital expenditure, across all geographies.
Procura’s delivery methodology is a unique, structured cost reduction process which includes contract audit, demand management and strategic sourcing.
Benefits of using a procurement consultancy
Procura consultants are experts in their field. They bring an expert approach, methodology and tools which ensures that the result is maximised
Procura consultants have deep supply-market insight. They are sourcing all the time, and clients benefit from up-to-date knowledge, supply-base insight and benchmarking
Procura consultants are focused on delivery. They do not have business-as-usual to distract them, enabling a relentless and rapid focus on the results. They deliver quicker and the result is better.
Procura consultants work with our clients. We align our sourcing to our client’s business requirements, ensuring we deliver the supply base that covers service, quality, innovation and assurance, as well as cost.
Procura consultants embed best practice to ensure that our client’s capability is transformed and benefits are sustainable.
Procura consultants ensure results are delivered. We guarantee results
Procura’s Identify, Deliver and Maintain model ensures we add tangible value at every stage.
Using our proprietary ProIntell platform, we identify and quantify opportunities for savings and performance improvement. We then assess the impact of different procurement strategies and produce a savings forecast and implementation plan.
Our consultants work alongside clients to deliver the savings, transfer knowledge and embed best practice. We’ve also developed a portfolio of pre-sourced, pre-agreed frameworks accessible through our ProSource tool to save on common business overheads.
We offer services to maintain the savings benefits, from ongoing monitoring and benchmarking of the cost base through ProIntell, to on-demand sourcing, to recruitment of procurement specialists through our own ProSearch business.
In the first phase, we identify and quantify opportunities for savings and operational procurement performance improvement.
A Procura Procurement Spend Analysis a comprehensive expenditure analysis, categorising and analysing your spend data to give you complete transparency of what you buy, where you buy from and how much you spend. Our leading-edge spend analytics platform, ProIntell, provides complete visualisation, analytics and insight.
The Procura Spend Analysis provides complete transparency of external expenditure.
Procurement Function Diagnostic
The Procura Procurement Function Diagnostic is an evaluation of current procurement performance using our procurement capability assessment tool, orientated to your sector and based on a series of performance KPI’s and our 110 point Procurement Excellence framework, we can quickly provide you with clear visibility of your procurement maturity, current performance level and an actionable roadmap for improvement.
The Procura Function Diagnostic answers the question “how good is my procurement function”?
A Procura Opportunity Assessment reviews each category of spend to create an accurate picture of the current situation, quantifying potential savings and how easily they can be achieved in order to develop a prioritised delivery plan.
The Opportunity Assessment process takes a structured category-by-category approach, talking to both procurement people and business stakeholders, to gain a deep understanding of your procurement profile, examining product specifications, order volumes and prices, along with suppliers and existing framework agreements, invoice and purchase order information.
Our consultants evaluate key spend areas to prioritise cost reduction opportunities by value and ease of implementation. After defining the implementation levers, as well as barriers and restrictions, these priority projects will be incorporated into a strategic plan that includes resource estimates and recommendations for organisational and process improvements to support long-term, sustainable savings.
The Procura Opportunity Assessment answers the question “how much could I save”?
In the second phase, Procura consultants work alongside clients to deliver the savings, transfer knowledge and embed best practice;
Procurement Cost Reduction
Procurement Cost Reduction is hands-on, consultant-led delivery of savings. Either directly, working as our client’s procurement team, or augmenting an existing team, working together in what we call “co-sourcing”.
Our delivery methodology is a unique, structured cost reduction process which includes contract audit, demand management and strategic sourcing.
- Contract audit is a retrospective forensic review to identify and reclaim over-payments, errors or penalties for non-performance
- Demand management is deep-dive analysis to understand cost drivers and influence the internal demand. It reduces or eliminates the demand to spend.
- Strategic sourcing is forward-focused procurement activity to minimise ongoing spend and optimise the supply base. It delivers run-rate savings.
Procurement Transformation is an operational change programme that, where needed, builds the client’s own procurement capability, putting in place the Six Enablers of Procurement Excellence;
- Strategy & Organisation
- People & Skills
- Strategic Procurement
- Strategic sourcing
- Supplier management
- Contract management
- Supply Chain
- Infrastructure, data & systems
- Policies, Procedures & Performance Management
By embedding Procurement Excellence, this ensures that the client has the ongoing capability to sustain the benefits and drive incremental performance year-on-year.
On-demand Procurement is project-by-project delivery and allows our clients to benefit from our expertise, knowledge and capacity as and when its needed – with organisations only paying for precisely what is required.
Procura’s ON-DEMAND procurement service allows clients to manage the unpredictable procurement demands on their organisation through intelligent, flexible resourcing.
Tail Spend Management
Tail spend comprises 80-90% of all purchased items—primarily low-volume and often one-off or infrequent orders that go out to a wide range of suppliers. Despite the vast number of items included in tail spend, it accounts for just the bottom 10-20% of a company’s total spend.
Procura’s Tail Spend Management service augments existing procurement resources, allowing the current team to focus on the top 20% of suppliers, whilst Procura restructure the tail. Our “hands-on” approach is a one-pass through the entire tail, putting spend in the right place, putting in the right suppliers and configuring tail spend processes to ensure sustainability.
Technology enables Procurement Excellence.
Leading organisations have evolved procurement from Strategic Sourcing to eProcurement to Digital Procurement and are beginning to reap benefits in terms of;
- Transparency – through the lens of technology, there is greater visibility of the position and value of procurement within an organisation.
- Greater Savings – the renewed focus of the procurement team allows for more spending to be addressed, evaluated and tackled.
- Faster Results – technology improves the speed of the entire sourcing and management process, creating efficiency within an organisation and improved response to any financial or budgetary concerns.
- Optimised workforce – resource can be managed, and strengths of individuals can be fully utilised to analyse and deal with larger and more complex issues.
eProcurement drove the adoption of technology allowing for eAuctions, eTenders and electronic catalogues through dedicated software packages and ERP system modules with some adoption of purchase-to-pay process automation.
Digital Procurement brings
- Insight – deep analytics providing commercial advantage insight
- Automation – greater efficiencies and customer satisfaction
- Value Creation – bringing procurement to the centre of value creation and a key pillar in the organisation
The integration of technology into procurement involves actions and changes in three areas
Category/Product – it is important to adopt available technology to automate simple processes which have traditionally required manual input and manipulation. Spend data and the resulting information provide plenty of insight and allow foresight and predictions of spend; this in turn allows organisations to focus their attention to more complex categories and drive more value from these areas.
Employees – reorganisation and centralisation of the procurement team is a complex but valuable step, allowing employees to focus on greater value areas of an organisation. The automation of procure-to-pay processes allows technology to handle the mundane tasks, and in this way the roles of employees evolve into a balance between analytical and creative thinking.
Suppliers – Data and analytics allow supplier KPIs to be monitored, reported and tracked; this can enable clearer and more actionable discussion points. Hence, the traditional roles of supplier and customer can develop into a collaboratve relationship. Further development of these relationships can foster competition between suppliers, as all this information and insight now provides an organisation with an enhanced knowledge of their supplier base.
Procura helps clients navigate the journey to digital procurement and leverage the power of procurement technology. Our services include:
- Digital Procurement Diagnostic
- Technology and provider selection
- Process mapping and Implementation
There is increasing pressure from consumers, staff, and investors for organisations to minimise their negative social and environmental impacts.
We believe that the procurement function is a key enabler for organisations who want to raise their environmental and ethical profile. Between 40% and 80% of an organisation’s revenue is typically re-spent through its supply chain. Organisations must utilise the procurement function and engage their supply chain to achieve their sustainability objectives.
Procura deliver solutions and tools that ensure best practise in sustainable procurement is embedded with a measurable impact on the supply chain. Our approach is flexible and adapted to each of our clients, deliverables include;
- Spend Analysis using our ProIntell tool to provide transparency of supplier spend
- Sustainable Procurement Diagnostic measures how the procurement function is involved and equipped to support sustainability objectives
- Sustainable Impact Assessment highlights spend categories with the greatest opportunity and risk tailored to our client's sustainability objectives
- Category Strategies that can be effectively implemented with or without the support of Procura’s Sustainability Consultants
- Capability Enhancement empowers and upskills the Procurement function by ensuring the correct governance, policy and skills are in place
- GreenSource buying frameworks with pre-qualified suppliers who offer environmentally sustainable products and services for common business overheads
- Achievement Tracking in our ProIntell tool with metrics that can be reported on in marketing and Corporate Social Responsibility campaigns
Our consultants work alongside clients to deliver sustainable solutions, transfer knowledge and embed best practice. Our clients benefit from;
- Increased brand value by sharing sustainable achievements with customers
- Mitigating reputational risk by improving the visibility of and engagement with the supply chain
- Attracting and retaining high performing staff from an increasingly sustainability conscious talent pool
- Greater access to environmental and social investment opportunities
- Cost savings through, demand management, technology innovation, waste reduction, risk mitigation, the GreenSource group purchasing frameworks and many more
Keywords: Circular economy, circular procurement, circular supply chains, Ethical, Ethics, long term sustainable growth, UN Sustainable Development Goals, SDG’s, Green Procurement, Green Investment, Sustainable Investment, ISO 20400 Sustainable Procurement, CSR, Corporate Social Responsibility
Due Diligence Support
Procura provide Due Diligence support, pre-acquisition, providing an assessment of savings, synergies and risks for target acquisitions.
For Private Equity organisations and corporates considering mergers, acquisitions or disposals we offer a high-level assessment covering:
- Procurement organisation and processes
- Current procurement effectiveness
- Tools and technology
- Non-pay spend visibility
- Savings assessment on a category-by-category basis
- Risk profiling
Depending upon the level of data availability and access to the target, we provide a clear assessment of the potential EBIT improvement in the target, potential cost reduction and efficiency synergies from a merger and an implementation workplan for immediate execution post transaction.
In the third phase, we offer services to augment and advance our client’s procurement delivery models;
Procurement Category Management
As organisations develop their procurement sophistication, a shift from a reactive ‘requirements-based’ approach to a proactive one where all spend is considered and ‘categorised’ can prove highly effective.
By focusing on specific supply-market categories and the strategies and workplans that are required to proactively source, address and manage them, significant enhancements (and cost savings) become possible.
Procura’s Category Management approach, provides the methodology and toolkit to achieve this - fundamentally changing the way organisations approaches the supply-market.
Supplier Relationship Management (SRM)
Managing Key Suppliers delivers significant commercial and business impact – increasing value and lowering costs.
SRM is the systematic management of an organisations‘ relationship and interactions with its key suppliers. However, it is not just a process, It must have TEETH!
The objective is to achieve competitive advantage, by reducing cost, increasing value, leveraging supplier innovation and reducing risk throughout the life cycle of the relationship.
Procura’s SRM methodology supports effective SRM through:
- SRM diagnostic and transformation planning
- Segmentation and targeting
- Suppler Management Toolkit
- Training and coaching
- Co-Sourcing – delivering together to drive benefits and embed process and methodology
Executive Search & Recruitment
Procura Executive Search is a specialist boutique recruitment practice with offices in London & New York delivering tailored professional Procurement & Supply Chain recruitment services for clients in the UK, Europe, USA, Middle East, South-East Asia and Australasia.
The ProSearch team recruit for both Permanent and Interim roles, from Analyst to Board level appointments and possess a truly global network, delivering the right solution at the right time, from retained Executive Search, contingent recruitment and talent pipeline support for ‘hard to fill’ roles.
Procurement Training & Development
Procura’s Training & Development services upskill and equip procurement teams with the skills, approaches and knowledge they need to deliver.
Procura have developed several specialist tools which enable us to precisely pinpoint individual and functional training needs, helping clients to precisely tailor their training and development and deliver the biggest returns.
Procuradevelop and deliver bespoke training and development programmes to support our clients - from ‘Procurement 101’ to specialist programmes supporting Category Management, Supplier Relationship Management and Supply Chain Management.
Procura supports organisations across the following areas:
- Procurement Training Needs Assessment
- Personal Development Plans
- Bespoke Training and Coaching programmes
- Category Management training
Procurement Managed Service
Procura’s Procurement Managed Service gives access to expertise, supply-market knowledge, experience, tools, techniques and the commercially-incentivised drive to outperform an in-house procurement function.Our hybrid subscription/performance incentivisation model provides clients with budgetary clarity plus the commercial incentivisation to drive year-on-year improvements to your cost base.