Strategic procurement is pivotal in driving business value. Discover how it maximises third -party spending, aligns with organisational goals, and ensures long-term success through enhanced stakeholder relationships.
In today’s business environment, the role of procurement has to evolve from being a cost-saving or compliance function to becoming a strategic partner that drives value across the organisation.
To deliver improved business value, it must first be measured. This information must then be leveraged by procurement and stakeholders to define the options for enhancing value. A collaborative approach not only ensures that the products and services procured meet the exact needs of the business but also fosters innovation, efficiency, and long-term sustainability.
Measuring value
Procurement has traditionally been viewed as focusing primarily on the cost of goods and services; this limiting approach, which we often see with our clients, fails to consider the opportunity to improve the outcomes provided by those goods and services. This means that suppliers who can deliver better outcomes are often not selected, if they are not also the lowest cost.
Good quality management information is important to enable both procurement and business stakeholders to easily access data, assess opportunities and define benefits that will be delivered. This also supports developing an effective case for change that survives scrutiny from wider business stakeholders.
We routinely work with clients to map the value delivered by their third-party spend, identifying the key benefits of such expenditure. The insights from this analysis play a crucial role in understanding stakeholder needs, and substantially increasing business performance through improved value-driven strategies. By incorporating these methodologies into the business-as-usual procurement process and procedures, organisations can shift their focus from costs savings to recognising the broader value and ensuring long-term benefits.
Understanding stakeholder needs
Even when the full value delivered by third parties is not completely understood, there are always opportunities to improve specifications to better meet business requirements. This process requires a deeper understanding of the needs and expectations of stakeholders who use third party providers of goods and services. Typically, this understanding is developed through active engagement with business stakeholders, including those in finance, and, where appropriate, suppliers themselves.
For example, by defining the expected outcomes of contracts, including the performance characteristics of goods and services, we have successfully helped multiple clients to achieve better value. Changing the way in which procurement seeks to define stakeholder needs, so that clearly defined outcomes are articulated, maximises the potential for value improvement.
How to ensure that value is delivered
Procurement needs to change its focus from simply managing costs to defining and maximising value in the organisation. This strategic shift requires that procurement and stakeholders use the collected data to identify and implement opportunities for improvement.
Procurement also needs to nurture strong relationships with business stakeholders to enable constructive exchange about the value delivered and to understand the ultimate outcomes needed. These relationships must be built on trust, ensuring that stakeholders are fully engaged and receptive to discussing and adopting new ways to enhance value.
While individuals can deliver some of these changes independently, the greatest impact is achieved when these principles are integrated into formal business processes.
Are you ready to shift your focus from cost to value? Contact us to see how easily strategic procurement can drive real value for your organisation:
Alwyn Frank
Associate Partner, Capita Procurement Solutions
With 20 years’ experience in procurement and contract management, including extensive experience working at a strategic level, Alwyn is passionate about delivering the best-value through procurement and supply chain management. He excels at developing and leading high-performing procurement teams that perform to these standards. With functional expertise gained in engineering, facilities management, construction and railway operations he helps organisations improve their purchasing and supply chain strategies to achieve cost savings, efficiency, and compliance.
