The rate of change required of the procurement function to keep pace with business demands continues to accelerate. Having achieved success over the last decade in building structured processes, generating cost savings, and expanding visibility into overall spend, what’s next for procurement?

LIAVITA provides the next leap in procurement capability with two related and transforming steps. First, procurement must evolve its role to become a true partner to the business rather than a passive service provider. This change will be grounded in the early wins of cost savings and process improvement. It will grow out of a studied knowledge of the business strategy, an understanding of the trajectory of key supply markets, and ability to impact business growth. The second and related step is the maturation of the procurement function into a sustainable value driver for the business. Actively and selectively investing in and managing procurement resources can accomplish this step.

While the procurement technology market has exploded with offerings over the past decade and most mature procurement organizations have built solid processes and enabling technology, human capital has actually become a scarce and valued resource. Procurement organizations that recognize the value of investing in talent will develop the strategic perspectives, business skills, and breadth of knowledge to be able to take that next step to becoming a true business partner.   LIAVITA provides an extension of your procurement team to a global supply base for ongoing competitive procurement success.

Procurement Category Management is a strategic approach that organizes procurement resources to focus on specific areas of spends. This enables category managers to focus their time and conduct in-depth market analysis to fully leverage their procurement decisions on behalf of the whole organization. The results can be significantly greater than traditional transactional-based purchasing methods.

Strategic Implications

• Adopt a business—not cost—driven focus.
• Balance long-term vision and planning with short-term agility.
• Separate strategic processes from tactical processes.
• Recognize supplier segmentation as a foundation for category management.
• Engage procurement in the full value chain with a specific focus on customer needs and values.

Resource Commitment and Talent Management

• Empower visible, focused category management teams with diverse membership.
• Provide opportunities for career progression and skills acquisition through clearly articulated and differentiated requirements across the procurement organization.
• Seek to incorporate procurement and sourcing early in the new product development process.

Category-Specific Processes and Tools

• Create a standardized category approach to enable working and resourcing across categories and the ability to decide how much to invest by category.
• Implement category risk management to monitor external market risks at the market or category level.
• Conduct supplier risk assessments as part of the strategic sourcing process and on an ongoing basis.
• Maintain an Intranet portal to provide one source for information that all relevant employees can access.

Extending Supplier Relationships

• Invest in building strong suppliers.
• Give suppliers tools to succeed and create a symbiotic relationship.