Whether your company’s procurement department is relatively new or has already been up and running for several years, you need to take the time to assess the department’s maturity.
The most mature procurement departments aren’t necessarily the ones that have been around the longest. Rather, they’re the ones with well-developed processes, consistent management policies and clearly outlined goals.
In order to begin assessing your department, compare your current status to the benchmarks of a mature procurement department; it will better help you define your goals for improvement.
The four benchmarks of a mature procurement department
The benchmarks of a mature procurement department can be divided into four categories: management, processes, ongoing evaluations and personnel.
To whom does the head of procurement report?
- A mature department will deal directly with someone at the company’s executive level, such as the chief financial officer or general manager.
Is management consistent?
- There should be a clear chain of command in order to achieve accountability. Management should be able to define measurable objectives for the team and then consistently and transparently follow up on them.
Does the procurement department have clearly defined strategies in place?
- Strategic planning should take place at the departmental level. Company-wide goals and processes should be taken into consideration to ensure continuity, but there should be a separate procurement strategy just as there is a separate marketing strategy.
How well defined are your procurement processes?
- Buyers should know what to do in a many different situations. Well-established processes will help to ease stressful situations and lessen the impact of employee turnover and illness along with creating a more efficient working environment.
3) Ongoing Evaluations
What role does feedback play?
- It’s important to constantly ask your stakeholders their opinion regarding procurement. Both internal and external stakeholders can provide both formal (e.g. surveys) and informal (e.g. conversations) feedback. It should be gathered and evaluated and then used to make improvements.
How are metrics being used to develop and meet your objectives?
- Numbers and measurements should be used whenever possible to help you identify goals and areas for improvement. Numbers are an objective form of assessment so long as they are interpreted in a consistent manner.
What’s the general atmosphere of the department?
- Discontentment can pollute the air of any office, leading to a high turnover rate and subpar productivity. Example: Poorly defined processes and buyers not knowing what steps they are required to document and complete can lead to delays and confrontations. Therefore procurement processes should be discussed and analyzed with the team. Stop and gauge employee satisfaction every so often, and make improvements based on team feedback whenever possible.
Do your buyers actively participate in professional procurement organizations and industry conferences?
- Procurement is in a constant state of flux. New procurement software and big data are changing the procurement landscape as you read this, and it’s important for your buyers to stay on top of the latest developments.
Remember, even if you feel your department meets these benchmarks now, you should continue to re-evaluate them at regular intervals. Markets are constantly changing, company executives may come and go, and technology is developing at a feverish pace. All of these factors may influence your department at some point in time, and continuous assessment will help you stay on top of the game.