Is Your Procurement Approach Truly Proactive?
Intuitively, you know that procurement should be proactive, not reactive. But how do you make procurement proactive?
Proactive procurement means knowing what your organization will buy and planning an appropriate procurement strategy well before the first purchase order needs to be placed. Acquiring this knowledge involves a combination of analyzing spend and interviewing internal customers who are in a position to estimate future demand. Here are eight questions to ask these internal customers as the organization plans for the coming year:
- What new products or services will our organization be introducing next year?
- What changes to existing products or services will our organization be making next year?
- What products or services will our organization be discontinuing next year?
- What one-time capital projects are going to begin in the next year?
- For capital projects already in progress, how will the demand for purchased products and services change next year compared to this year?
- What operating supplies or equipment that our organization has been purchasing will be replaced by a different type of product (e.g., buying tablet computers instead of laptops, buying cloud storage space instead of flash drives, etc.)?
- (If you notice demand for a purchased product or service has been decreasing or increasing year after year after year) Do you expect the demand trend for this product/service to continue or to level out next year?
- (If you notice erratic demand patterns for a purchased product or service over a period of several years) The demand for this product and service has been hard to predict based on data alone: What insight can you share on the expected demand for it next year?
Having answers to these simple questions will greatly improve your ability to reap the benefits of proactive procurement.