How Strategic Is Your Procurement Thinking?

How Should You Think Beyond Procurement?

PurchTips Edition #384

Engaging in truly strategic procurement thinking requires that you know more than just procurement techniques. It requires you to also understand your organization strategically, beyond procurement.  Do you?  Well, you do if you can easily answer the following 19 questions (and answer them the same way your CEO would):

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  1. What is your organization’s current annual revenue?
  2. What is your organization’s annual revenue growth trend over the past 3-5 years?
  3. How does that revenue growth trend compare with the industry?
  4. What factors are responsible for your organization’s revenue growth trend being better/worse than the industry?
  5. How much are your organization’s current annual expenses?
  6. Of those expenses, how much are direct expenses and how much are indirect expenses?
  7. Of those direct expenses, how much is sourced and sourceable (including any direct labor that can be outsourced)?
  8. Of all expenses, how much is spent on purchased goods and services?
  9. What is your organization’s current annual profit margin?
  10. What is your organization’s profit margin growth trend over the past 3-5 years?
  11. How does that profit margin growth trend compare with the industry?
  12. What factors are responsible for your organization’s profit margin growth trend being better/worse than the industry?
  13. Who are your organization’s competitors?
  14. What is your organization’s competitive advantage? (i.e., why customers choose your organization over competitors)
  15. How will your organization evolve over the next 3-5 years in order to survive and thrive amid changes in the world?
  16. What are your organization’s most strategic goals?
  17. What departments (e.g., engineering, marketing, manufacturing, etc.) are most important towards the accomplishment of those strategic goals?
  18. What are the biggest threats/risks to your organization being able to achieve its strategic goals?
  19. How much of a priority is social responsibility to your organization?

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Copyright 2017. This article is the property of the Next Level Purchasing Association and may not be copied or republished in any form without the express written consent of the Next Level Purchasing Association. Click here to request republishing permission.

By Charles Dominick, SPSM, SPSM2, SPSM3