Further Developing of the Procurement Department

Core focus of this thematic area is on the selection of optimal structures and processes (= structural organization/procedural organization) for procurement. This does not solely lead to the improvement of internal departmental cooperation, but also to the best possible structure of the collaboration with the specialized departments (cross-functional cooperation) and suppliers.

• Upturn in profit in a dual-way:
  • You increase savings because the procurement department’s structures and processes are optimally aligned to its core tasks.
  • You work cost-efficiently because personnel costs in the procurement department remain under control thanks to an optimal resource dimensioning.
• Security: Thanks to optimal resource dimensioning, you can be sure that you have sufficient capacities for all key procurement tasks.
• Reputation: The optimized structures/processes result in a seamless cooperation within the procurement department, with the specialized divisions and suppliers. In this way, the reputation of your procurement employees improves noticeably.

1. Analysis/assessment of the current organizational structure (structural organization) and the processes (procedural organization) in procurement
2. Redesign of structures and processes (definition of the procurement department’s core tasks, determination of the degree of centralization, quantification of necessary resources, etc.)
3. Transformation of the current procurement organization into an optimal, newly aligned procurement department

In order to gain deep insights into our approach for the optimization of the procurement organization, we offer you a "mini-reorganization of procurement" in the form of a one-day workshop. In this workshop, we develop the optimal procurement organization for two selected material groups of your choice. The mini-reorganization includes the following services:

Agreement on the two material groups to be reorganized and the approach:

1. Determination of the database for the reorganization (mapping of the as is situation):

     a. Recording of actual structures and processes for both material groups 
     b. Determination of the procurement volume and number of suppliers 
     c. Identification of the number of purchasers who are responsible for the material groups worldwide
     d. Recording of the job profiles/task definitions and core focuses of activity to date
     e. Determination of the internal customers to be supported

2. Development of a recommendation for the redesign of the organizational structure of both material groups by answering the following key questions of the procurement organization:

     a. Which tasks should the procurement department perform in the future?
     b. On which hierarchical level should the procurement department be embedded?
     c. How should the authority to issue instructions be regulated?
     d. How many resources will be required?
     e. Who should perform the tasks?
     f. How should the cooperation with the specialized divisional representatives be organized?
     g. Which degree of centralization is meaningful?

3. Definition of an implementation plan to reorganize both material groups

The objective is to define and achieve the employee quality required in order to fulfill procurement targets.

• Upturn in profit: You realize higher savings thanks to the enhanced quality and motivation of the procurement personnel
• Security: You can be certain that you are deploying the best possible personnel
• Reputation: Thanks to more professional personnel, the procurement department’s reputation improves towards the specialized divisions

1. Identification of requirements on procurement staff (target profile)
2. Determination of existing employee skills/capabilities (as is profile) as well as the incentive/remuneration systems and HR development measures
3. Design and support of the HR development program (e.g. by defining training plans for each employee, conducting trainings and reviewing the learning effect, etc.) and adjusting the incentive/remuneration system wherever necessary

We offer you a one-day workshop to get deep insights into our approach to the training and development of staff in procurement. The workshop has the following agenda/content:

1. Identification of the staff requirements in procurement
2. Recording of existing staff skills, incentive and compensation systems, and personnel development measures
3. Approach to set up a personnel development program

Main focus is placed on two issues: 

• Optimization of terms/conditions for direct/indirect material groups, services and investment groups

and/or

• The establishment of alternative sources of supply (objective: ensure security of supply/innovation capability)

• Upturn in profit: You achieve higher savings thanks to the consistent implementation of the strategic sourcing process
• Security in a two-fold way:
  • You have the assurance of paying prices which are in line with the market because all savings levers have been tapped and therefore "maximum" savings have been achieved
  • You minimize the risk of supply by establishing alternative sources of supply

• Priorization of the material groups to be optimized (generally according to savings potential and the complexity factor of the implementation)
• Implementation of the five-pronged strategic sourcing process to achieve savings and/or to build up alternative supplier sources: 
  1. Demand analysis
  2. Procurement market analysis
  3. Definition of procurement strategies
  4. Supplier analysis
  5. Implementation

In order to gain deep insights into our approach for the improvement of terms & conditions of procurement, we offer you a one-day workshop with the following agenda/contents:

1. Introduction

     a. Advantages/purpose of the strategic sourcing process
     b. Overview of process steps

2. Detailed demand analysis

3. The right approach for the procurement market analysis

4. Selecting the optimal procurement strategy

     a.Summary of findings from the demand and procurement market analysis to define the optimal strategy 
     b. Selection of the most efficient savings lever depending on the defined strategy 
     c.  Identifying various implementation paths 
     d. Tried and proven approach to introduce the selected implementation path

5. Optimal and comprehensive selection of suppliers

     a. Key criteria for supplier selection 
     b. Optimal preparation of negotiations

6. Conclusion and implementation of the contract

     a. Security thanks to transparent contracts 
     b. Efficient integration of new suppliers in current processes and daily business

7. Prerequisites for the successful implementation of the strategic sourcing process

8. Pitfalls for each process step

Project procurement is a frequently selected organizational form in procurement or in the cross-functional procurement process for complex as well as valuable products and services. Core focus here is on complete support of the entire procurement measure by a buyer or a permanent team of buyers. Project procurement therefore places particularly high requirements on the employees’ competence.

Upturn in profit: You ensure that project procurement is only used for procurement measures suited for that purpose, and deliveries and services that can be bundled are procured in more appropriate organizational forms.

Qualification: You develop employees’ competencies in a target-oriented way geared towards complex requirements in project procurement. In turn, you increase controlling competence and actively safeguard your company against suppliers’ additional claims (à claims management).

Reputation: You enhance the procurement department’s reputation because they competently manage complex project tenders, in turn contributing substantially to the success of the project measure.

1. Situation analysis: We analyze the strengths/weaknesses of project procurement and the criteria for using this organizational form based on your company’s business segments and the procurement measures resulting from this.
2. Organization of project procurement: Together with you, we develop a criteria catalog, depending on the product groups, as to when project procurement represents a preferred organizational form.
3. Employee competencies: Based on requirements in project procurement, we, together with you, define the competence profile for employee development.

To get deeper insights into our approach for the development of methods, we offer you a one-day workshop with the following agenda/contents:

1. Introduction
   1. Organizational forms in procurement, especially series and project procurement
   2. Criteria to describe organizational requirements of the product groups
2. Situation analysis
   1. Identification of business segments and typical procurement measures
   2. Analysis of existing criteria to select the procurement organization
3. Formulation of organizational form
   1. Definition of possible alternative organizational forms
   2. Allocation of preferred organizational form to product group requirements
4. Employees’ competence model
   1. Evaluation of necessary employee competencies in project procurement
   2. Skills development approach

The objective is to optimize the entire process of the operational and tactical procurement. Operational procurement regulates the process from the requisitions and delivery logistics through to the payment (→ order-to-pay process).

Tactical procurement represents the connection between the operational and strategic procurement. After strategic procurement has defined the supplier pool, tactical procurement issues a call for tender within the pool and chooses a supplier. Afterwards, operational procurement ensures smooth processing of  the orders.

• Upturn in profit in a two-fold way:
  • More efficient, lean processes result in higher productivity of the procurement department or to available HR capacities
  • By defining order channels (without loopholes), the Maverick buying quota is reduced. In this way, savings increase because it is ensured that the contracts with suppliers are actually implemented as well (the savings are not only existent "on paper", but rather, they will actually be realized, too).
• Security: You have the certainty of fulfilling auditing regulations since the new processes are structured in an audit-proof manner in consultation with all parties involved in the process

1. Analysis of the current ordering processes ("order-to-pay") and the relevant IT support
2. Identification of potential for improvement (e.g. by streamlining/simplifying processes and conducting a compliance analysis) in the ordering process
3. Adjustment of processes in order to realize efficiency potential

To gain deep insights into our approach during optimization of the tactical/operational procurement, we offer you a one-day workshop with the following agenda/contents:

1. Introduction: differentiation between tactical/operational procurement and strategic procurement
2. Implementation: strengths/weaknesses analysis of the existing tactical/operational procurement process
3. Identification of optimization potentials in the tactical/operational procurement process
4. Approach to create an implementation/training plan for the optimization steps in the tactical/operational procurement process

The core focus is on the creation of a supplier evaluation and development system.

• Upturn in profit in a two-fold way:

  • Increase of savings because new ideas for savings emerge that can be implemented thanks to the continuous search for improvement opportunities
  • Cost/time advantages: In the future, you focus more on the truly key suppliers since the supplier evaluation provides clear-cut results as to where the procurement department must invest its time/resources (= personnel costs)
• Security in a two-fold way:
  • You have the certainty of working with the best suppliers
  • You optimize the security of supply by precisely monitoring the suppliers’ performance and the measures resulting from this for further supplier development
• Reputation that a good supplier management gives the suppliers a certain feeling of being held in esteem that is generally rewarded. In this way, suppliers are considered as business partners.

1. Determination of the necessary supplier data (ABC analysis on a company and material group level, recording of the degree of cooperation with suppliers, etc.)
2. Design of the concept for supplier management (which suppliers should be evaluated/developed? Which criteria will be required for supplier evaluation?, etc.)
3. Implementation of the concept for all or selected material groups

To gain deep insights into our approach for supplier management, we offer you a one-day workshop with the following agenda/contents: 

1. Introduction

     a. Benefits/purpose of a supplier/risk management system
     b. The elements of a supplier/risk management system

2. Concept of a successful supplier/risk management

     a. Professional supplier/risk evaluation
     b. The right classification of suppliers
     c. Consistent supplier development

3. Implementation of supplier/risk management

     a. Defining action plans and conducting discussions with suppliers
     b. Introducing the necessary IT tools (which systems will be required?)
     c. Selecting a suitable IT service providerd
     d. Implementing supplier management within the company

• At the strategic level, new and high-quality information and procurement data are the key to decision-making support.

• Operational focus is on significantly improving the quality and speed of work through state-of-the-art business intelligence and advanced analytics systems.

• Information advantage: deep analysis generates information that can be used as valuable decision support for the top management.

• Increasing quality and speed: The quality and speed of your processes is significantly increased by optimizing your tools and IT systems. The goal is to have repetitive, time-consuming and error-prone work processes carried out by IT systems instead of employees, using clearly reproducible rules and regulations. This ensures a consistent high quality of data, analysis and decisions. The whole thing happens with shorter lead times and significantly lower staff costs.

1. Analysis of existing IT systems in procurement
2. Collection of processes / tasks supported by IT systems
3. Definition of the requirements for the performance of the IT systems to support the required tasks and processes
4. Determining the need for optimization of existing IT systems
5. Definition of specification sheets for adaptation of existing systems or introduction of new systems
6. Selection of IT service providers to implement the adjustments defined in the specifications
7. Monitoring of the IT service provider in the implementation and review of the adjustments from the specifications

In order to gain a deeper insight into our approach to the integrated digitization of core processes, we offer you a one-day workshop to assess the opportunities through an extension / consolidation of the tools as well as the project scope for the implementation.

The quality of data in procurement departments is often inadequate. Creating a transparent database is, however, necessary for designing the overall organization as well as the processes at the strategic and operational level as efficient and effective as possible.

Our consultants will gladly assist you on the way to optimizing your master data. You can reach us under +49 211 - 56 38 75 - 0 or by email: infodontospamme@gowaway.hoeveler-holzmann.com.

We support you in developing procurement objectives based on your overarching corporate goals and strategy. The objectives defined are implemented by formulating the procurement strategy. Clearly defined measures, responsibilities and timetables for your categories are determined based on the procurement strategy. Guidelines for procurement’s future orientation are set by implementing the procurement strategy in your category management. All other decisions, such as with regard to the procurement organization, must be aligned to the procurement objectives defined and the procurement strategy.

• Upturn in profit: You focus on the "right" savings because the purchasing department works in line with objectives/the strategy, and only does that which contributes to the achievement of objectives/the strategy.
• Reliability: You ensure that the right focus is always set and can demonstrate to top management and departments at all times that the purchasing department is working according to the corporate objectives and strategy (→ "internal customer orientation").
• Reputation: You enhance the purchasing department’s reputation because it works "to the point" in a target-oriented way and delivers a major contribution to the targeted business success.

1. Situational analysis: We analyze procurement’s strengths and weaknesses based on the corporate objectives and strategy.
2. Definition of procurement objectives: Together with you, we develop and select overarching procurement objectives and define corresponding sub-objectives for the various hierarchical levels and categories.
3. Definition of procurement strategy and category management: Based on the procurement objectives defined, a catalog of measures is developed for the implementation of the procurement strategy in category management and the further development of the purchasing department.

To gain deeper insights into our approach, we offer you a one-day workshop with the following agenda/contents:

1. Introduction
   1. Benefits/purpose of the procurement objectives and procurement strategy.
   2. Process to define procurement objectives and the procurement strategy.
2. Conducting the situational analysis
   1. Identification of corporate objectives and strategy as the framework condition.
   2. Analysis of strengths/weaknesses of the purchasing department/category management.
3. Formulation/selection of the strategy
   1. Determination of potential alternatives for procurement strategies.
   2. Selection of the right procurement strategy.
4. Implementation of the strategy
   1. Elements ("procurement influencing factors") to implement the procurement strategy.
   2. Approach to develop the implementation plan for implementation in category management.

The objective is to proactively control procurement by means of setting up a key performance indicator system, a tracking of the procurement initiatives, a profit & loss-oriented measurement of savings and of procurement volume analyses.

• Upturn in profit in a dual-way:
  • You increase savings because the procurement department’s structures and processes are optimally aligned to its core tasks.
  • You work cost-efficiently because personnel costs in the procurement department remain under control thanks to an optimal resource dimensioning.
• Security: Thanks to optimal resource dimensioning, you can be sure that you have sufficient capacities for all key procurement tasks.
• Reputation: The optimized structures/processes result in a seamless cooperation within the procurement department, with the specialized divisions and suppliers. In this way, the reputation of your procurement employees improves noticeably.

1. Collection and evaluating the current status of procurement controlling’s core elements (procurement volume analysis, procurement initiatives tracking, measurement of savings and a key performance indicator system as well as the database’s quality and interlinking with the procurement and business strategy)
2. Developing and implementing the necessary improvement measures for procurement controlling’s core elements and for the quality of the database
3. Ensuring that the procurement controlling system is interlinked with the business and procurement strategy

In order to gain deep insights into our approach for the optimization of the procurement organization, we offer you a "mini-reorganization of procurement" in the form of a one-day workshop. In this workshop, we develop the optimal procurement organization for two selected material groups of your choice. The mini-reorganization includes the following services:

Agreement on the two material groups to be reorganized and the approach:

1. Determination of the database for the reorganization (mapping of the as is situation):

     a. Recording of actual structures and processes for both material groups 
     b. Determination of the procurement volume and number of suppliers 
     c. Identification of the number of purchasers who are responsible for the material groups worldwide
     d. Recording of the job profiles/task definitions and core focuses of activity to date
     e. Determination of the internal customers to be supported

2. Development of a recommendation for the redesign of the organizational structure of both material groups by answering the following key questions of the procurement organization:

     a. Which tasks should the procurement department perform in the future?
     b. On which hierarchical level should the procurement department be embedded?
     c. How should the authority to issue instructions be regulated?
     d. How many resources will be required?
     e. Who should perform the tasks?
     f. How should the cooperation with the specialized divisional representatives be organized?
     g. Which degree of centralization is meaningful?

3. Definition of an implementation plan to reorganize both material groups