How to Complete a Procurement Assessment
Procurement is vital to your organization - so what are you doing to ensure that procurement is optimized and efficient? Especially during these trying economic times, focusing on your procurement capabilities and locating areas of optimization will be key to your business's and procurement practices' success.
This is where it would be beneficial to conduct a procurement assessment of your procurement operation, which is conducted by either a third party or an individual outside of procurement. As you venture into the procurement assessment, there are a few key steps to consider to ensure a successful evaluation.
The Procurement Assessment Process
While the process may vary based on the organization, the most beneficial process to consider would include the following concepts and steps:
Agreeing on the assessment template and what needs to be covered
The facilitator would drill down on the key procurement areas by conducting one-on-one interviews, reviewing process documentation, reviewing procurement policies, and testing the procurement systems
Facilitator would then fill out the template and review it with the procurement head
Agree first pass on recommendations for areas to work on
Review/update assessment w/ procurement staff
Present findings to senior management
Once the process is defined, ensure to establish the key categories to focus on, which may include the following:
Procurement Process - It is essential to break down each key area (e.g. sourcing, supplier setup, infosec, contract, execution, payment, travel, and expense)
Support Areas to Consider - Having a cost-savings mindset, metrics, policies, analytics, third-party intelligence, communications, and training
Key Function Teams - Collaboration between Financial Planning & Analysis (FP&A), Accounts Payable (AP), Legal, Infosec, BPO, and shared services will be essential
Now, you are ready to customize your assessment template based on the needs of your company.
In the one on one interviews, it is best to keep it anonymous to ensure honest feedback. These one-on-ones will provide the feedback needed on key priorities and pain points. You will then need to color-code each review area as the following:
GREEN - Strong Competency
YELLOW - Area for Improvement
RED - Area to be Addressed with High Priority
When you work on the recommendations from the assessment, identify each action for impact, ease of implementation, risks, and benefits.
Getting Started With Your Procurement Assessment
Completing a procurement assessment demonstrates that your organization is seeking to be proactive in understanding how your procurement team can be more effective in optimizing the company’s spend. As a manager, taking a step back and conducting this assessment showcases that you have a comfort level to ask a third party for facilitation to ensure you receive good feedback without bias.
If you are seeking to improve your procurement organization but are unsure where to start, it may be beneficial to seek outside counsel and have another set of eyes oversee the procurement assessment.
Mike Glass runs GPC (Glass Procurement Consulting), a procurement consulting firm focused on optimizing a company's spend. Mike has worked in senior procurement management positions at NVIDIA, Google, Meta, Fitbit, and Flextronics. Mike would enjoy getting your insight on any procurement topic, feel free to contact Mike at mike@glassprocurementconsulting.com.
