MJC Sourcing - Procurement Best Practices
- Move fast, segment spend, address large spend opportunities 1st
- Develop and track annual savings goals by spend category
- Competition more important than size of deal - for leverage and best deal
- Standard “Sourcing Process” understood by all with team-based supplier selection decisions (procurement led, finance, legal and business areas on team for large strategic spend)
- Need data and systems to know where, how much, and with who you are spending
- Procurement organization staffing should be adequate to address all spend, target ROI 50-1
- Reverse auctions for all “commodity” spend categories, try to commoditize as much as possible
- Be confident suppliers are not charging you more than your competitors
- Have supplier contract exit strategies wherever possible for leverage and optimal performance
- You have the money, you always have the leverage, always push for more
- Suppliers must earn a fair profit
- Local, regional, and global sourcing strategies must be considered
- Be confident suppliers are not charging you more than your competitors in the market
- Reevaluate large and critical spend categories every 2-3 years, new products always emerge
- Hire top talent and provide ongoing training
- Supplier ability to deliver more important than who owns the business relationship
- Never commit to purchase volumes, if possible, forecasts are best
- Procurement organizations are neutral and always after best deal for the company
- Watch for supplier divide and conquer tactics, everyone at the company is on the same side
- Electronic RFPs when available, paper RFPs/binder responses not as efficient
MJC Sourcing's Best Practices for Procurement