1. PROCUREMENT STRATEGY
How to create value in increasing complex business world
Presented By : Nikunj Jain
https://www.linkedin.com/in/nikunjjain262/

2. P
2
P
Cycle
O
2
C
Cycle
SUPPLIERS MANUFACTURER CUSTOMER
MATERIAL FLOW (PRODUCT / MRO)
CASH FLOW
REVERSE PRODUCT FLOW
INFORMATION FLOW
SUPPLY CHAIN FLOW & PROCESSES

3. - Purchasing decision or actions that constitute purchasing
strategy are determined by the firm’s competitive priorities, it’s
resource capabilities, and the environment
- In the formulation of purchasing strategy, the organization
competitive priorities, the organizations strength &
weaknesses, and the competitive environment must be
considered
STRATEGIC PROCUREMENT

4. Supply continuity .Developing relationship with Key suppliers
.Discourage Maverick buying .
Improved Business Performance. Managing the procurement
process efficiently and effectively
Develop Supply Base Management which should always remain
optimally pruned .Eliminating Redundancies and unrationalized
choices .
Shifting from Manual to Automation throughout the organization’s
procurement processes .
WHY PROCUREMENT STRATEGY

5. PROCUREMENT

6. Organizational
Strategy
Supply Chain
Strategy
Procurement
Strategy
Strategic
Sourcing
Transaction
Management
Supplier
Relationship
Management
Manufacturing
Strategy
Lean
Manufacturing
Inventory
management
Quality
Management
STRUCTURE OF PROCURMENT STRATEGY

7. To acquire goods and / or services
- At the best possible total cost,
- In the right Qty,
- In the right Quality,
- At the right time,
- In the right place &
- From the right source
- In the Right Condition
for the direct benefit or use of our organization.
PROCURMENT MISSION

8. PROCUREMENT
STRATEGY
Targets & Plans
Procurement
& Market
Analytics
Procurement
Assessment
Gap Analysis
Strategic
Roadmap
Opportunity
Prioritiztion
Vision & Targets
Resource Plans
DEVELOPING PROCUREMENT MISSION

9. OPERATIONS
• Procurement Cost
• Quality & Service
SPENT FORECAST
• Savings Forecast
• Demand Forecast
.
REVENUE IMPACT
• Savings
BUSINESS DATA
• Strategic Business Plans
• Budgets
ECONOMIC DATA
• Commodity Indices
• Economic Forecast
• Supplier Acquisitions
FINACIAL DATA
• Projected Revenues
• Projected Cash Flows
• Growth
PROCUREMENT
STRATEGY
PROCUREMENT STRATEGY

10. DEVELOPING PROCUREMENT STRATEGY PLAN TO IMPROVE
COMPANY’S COMPETITIVENESS
Supply Base Market
• Knowledge of supplier base
• Development of key suppliers
• Supply base development and innovation
Procurement Positioning
• Key Supplier relationship management
• Annual purchasing plan, actions, objectives
etc
Procurement Organization
• Procurement area interactions and
influence
• Team Development strategy, career growth
Spend Cycle Control
• Continuous improvement of operational
process
• Contract negotiation and evaluation
Strategic Purchasing
Plan

11. MAKING THE PROCUREMENT STRATEGIC DECISISON

12. Supplier
Optimization
(Optimize the supplier base to
simplify the procurement process)
TQM Practice
(Customer & supplier relationship
Management)
Risk Management
(uncertainties & complexities
causing supply chain supply chain
disruption, dealt with risk
management)
Global Sourcing
(Provided opportunity to source
latest skills & resources, enhanced
productivity)
Vendor
Development
(Efficiency built-up)
Green Purchasing
(Helps in cost saving, minimize
supply chain risk, enhanced brand
image)
CORE PROCUREMENT STRATEGIES

13. • Low Risk
• High Cost
• Low Risk
• Low Cost
• High Risk
• High Cost
• High Risk
• Low Cost
Bottleneck
Items
Strategic
Items
Routine
Items
Leverage
Items
- Ensure Supply
- Acquire Capability
- Create Capability
- Invest in suppliers
- Simplify &
Automate
- Multiple Suppliers
- Built Partnership
- Acquire Capability
- Create in house
Capability
- Invest in suppliers to
ensure timely
availability
- Exploit purchasing
power & minimize cost
STRATEGIC PROCUREMENT MATRIX

14. Low
Expenditure
High Risk
High
Expenditure
High Risk
Low
Expenditure
Low Risk
High
Expenditure
Low Risk
Market
Condition & Risk
Expenditure
(Profit Impact)
STRATEGIC PURCHASE
TACTICAL PURCHASE
STRATEGIC PROCUREMENT MATRIX

15. STRATEGIC PROCUREMENT BENEFITS