C
Cost benchmarking is a technique used to compare an organization's cost structure and expenses against those of its competitors or industry standards. It involves analyzing cost drivers, cost allocation methods, and cost-saving strategies to identify areas where cost reduction or optimization can be achieved. Cost benchmarking helps organizations understand how their costs stack up against industry norms and identify opportunities for improvement. By benchmarking costs, organizations can uncover inefficiencies, streamline processes, negotiate better pricing with suppliers, and ultimately reduce expenses, leading to improved profitability and competitive advantage.
Specialism:
Procurement Management
D
Direct procurement refers to the acquisition of goods, materials, and services that are directly related to the production of a company's end product. These are typically items that are used in the manufacturing process, such as raw materials, components, and sub-assemblies. Direct procurement is a critical aspect of supply chain management and is important to ensure that a company can produce its products efficiently and effectively. Effective management of direct procurement can help a company control costs, improve quality, and increase efficiency in its manufacturing process.
Specialism:
Procurement Management
Procurement Operating Model
Procurement Strategy
I
Indirect procurement refers to the acquisition of goods and services that are not directly related to the production of a company's end product but are necessary to support the business's operations. These can include items such as office supplies, IT equipment, marketing services, travel, and facility management services. Indirect procurement is also known as non-core procurement or indirect spend. Effective management of indirect procurement can help a company control costs, increase efficiency, and improve supplier relationships. Indirect procurement is an important aspect of overall procurement management, and effective management can help a company improve its bottom line.
Specialism:
Procurement Management
Procurement Operating Model
Procurement Strategy
P
A preferred supplier is a supplier or group of suppliers that an organization has identified as its first choice for a particular product or service. This is typically based on the supplier's ability to meet the company's needs in terms of price, quality, delivery time, and other criteria.
A preferred supplier is usually selected after an evaluation process with the status typically granted for a specified period, often with the option to renew or extend the agreement.
Having a preferred supplier can offer several benefits for the company, such as cost savings through volume discounts or negotiated pricing, improved supply chain efficiency through better communication and collaboration, and reduced risk through a more stable and reliable supplier relationship. Equally, having preferred suppliers can streamline the procurement process through automation reducing administrative burden.
It is important for the organization to continuously monitor and evaluate the performance of its preferred suppliers to ensure that they continue to meet the organization's needs and expectations.
Specialism:
Category Management
eProcurement
Procurement Management
Procurement Process
Sourcing
Supplier Management
Procurement refers to the process of acquiring goods, services, or works from external sources to meet an organization's needs. It involves activities such as sourcing suppliers, negotiating contracts, managing supplier relationships, and ensuring timely and cost-effective delivery of the required resources. Procurement plays a crucial role in optimizing supply chain operations, controlling costs, mitigating risks, and ensuring the quality and availability of necessary inputs. It encompasses strategic decision-making, market analysis, supplier evaluation, and the implementation of best practices to achieve value for money and support the organization's objectives. Effective procurement practices contribute to operational efficiency, competitiveness, and overall organizational success.
Specialism:
Procurement Management
Procurement Strategy
Procurement governance refers to the set of policies, procedures, and controls that govern and regulate the procurement function within an organization. It encompasses the frameworks and mechanisms put in place to ensure that procurement activities align with strategic objectives, comply with legal and regulatory requirements, and follow ethical practices.
Procurement governance includes the establishment of procurement policies and procedures, oversight and control mechanisms, risk management practices, supplier evaluation and management processes, compliance monitoring, and performance measurement. Effective procurement governance ensures transparency, accountability, and integrity throughout the procurement process, mitigates risks, fosters fair and competitive supplier relationships, and supports the achievement of organizational goals.
Specialism:
Procurement Management
Procurement Operating Model
Procurement Operating Model
A procurement operating model refers to the structured framework that defines how the procurement function operates within an organization. It encompasses the organizational structure, processes, roles and responsibilities, technology enablement, and governance mechanisms that guide procurement activities.
A good operating model outlines how procurement interacts with internal stakeholders, suppliers, and other functions, as well as how it aligns with the organization's strategic goals. A well-designed procurement operating model enables efficient and effective procurement processes, ensures compliance with policies and regulations, fosters supplier collaboration, facilitates data-driven decision-making, and drives value creation through optimized sourcing, supplier management, and contract execution.
Specialism:
Procurement Management
Procurement Operating Model
Procurement Strategy
Procurement Performance Management
Procurement performance management refers to the systematic process of measuring, monitoring, and improving the performance of the procurement function within an organization. It involves defining key performance indicators (KPIs) and metrics to assess the effectiveness, efficiency, and value delivered by procurement activities.
Procurement performance management encompasses activities such as data collection, analysis, reporting, and benchmarking to evaluate procurement performance against targets and industry best practices. It enables organizations to identify areas for improvement, track cost savings, measure supplier performance, monitor compliance, and drive continuous process enhancements.
Through procurement performance management, organizations can optimize procurement operations, enhance decision-making, and demonstrate the value of procurement contributions to overall organizational success. Procurement Performance Management is distinctly different to Supplier Performance Management.
Specialism:
Procurement Management
Procurement Operating Model
A procurement strategy is a plan of action designed to guide an organization's procurement process and decision-making. It outlines an organization's approach to acquire the goods, services, and resources it needs to operate and achieve its objectives.A well-defined procurement strategy considers the organization's overall goals, budget, risk tolerance, and market conditions. It outlines the types of suppliers to target, how to engage with them, and how to manage relationships to ensure a steady supply of goods and services at a competitive price.
Specialism:
Procurement Management
Procurement Operating Model
Procurement Strategy
Learn moreA purchasing card, also known as a P-card, is a payment tool issued by a company or organization to authorized employees for making business-related purchases. It functions like a credit card, but with specific restrictions and controls. Purchasing cards streamline the procurement process by allowing employees to directly make purchases from approved vendors without going through traditional procurement procedures.
These cards offer convenience, flexibility, and ease of tracking expenses. They typically come with spending limits and predefined spending categories to ensure compliance with company policies. Purchasing cards can simplify purchasing procedures, reduce paperwork, and provide organizations with better visibility and control over expenses.
Specialism:
eProcurement
Procurement Management
Procurement Process
