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  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 efficien

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