Center Led Procurement III: Best Practices

Friday we introduced you to the concept of center-led procurement, where a procurement center of excellence (COE) centrally creates and coordinates strategic purchasing decisions across the enterprise and yesterday we discussed the role of the procurement COE and some of the challenges in its initial creation. Today we discuss some best practices for getting the most out of your procurement COE.

(1) A Chief Purchasing Officer (CPO) or Chief Supply Chain Officer (CSCO) on the executive team leads the COE

This insures that plans, and initiatives, are aligned with the business, diverts resistance, and helps bring each of the different business units on board quickly.

(2) Cross Functional Teams

This insures that the right knowledge is in place to make the best decisions from a strategic and best practices viewpoint.

(3) Multi-Year Supply Plans

This promotes better alignment and integration with your strategic supply chain design and helps establish the center as a strategic leader in key commodity categories.

(4) Coordinated Metrics and Incentives

Each unit needs to have their performance analyzed off of the same metrics, linked to actual value creation, and the incentives of each unit need to be tied to these metrics. Everyone wins or no one wins. This insures that procurement, as the biggest potential contributor to cost savings, maintains a central role in the organization and that everyone sticks to the mutually agreed upon strategies and policies.

(5) Web-Based Automation and Decision Support Tools

They allow you to accelerate the transition to the center led model and extend sourcing activities to the desktop of every stakeholder in your organization while enforcing corporate policies and processes.

(6) Ongoing Education

Keep up to date on the latest trends and success stories and share best practices and methodologies with each unit of the organization on a regular basis.

(7) Speak to the supplier community with a central voice

This helps you fully leverage your spend opportunities and facilitates shared process improvements. Furthermore, this will help you select and integrate a key group of suppliers into the product design and specification process. Strong supplier management will allow you take full advantage of supplier performance and this will lead to better quality, faster product introduction, shorter cycle times, and more value from the relationship.

For more information on center led procurement, see the Center Led Purchasing: The Procurement Organization of Tomorrow wiki-paper over on the e-Sourcing Wiki.

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