At the highest level, alignment is defined in the form of objectives/strategies for the entire procurement across and beyond all divisions/business units. Particular core focus in the process is on digitalization of Procurement 4.0.
Alignment of Objectives/Strategy
The cornerstone for sustainable success of digitalized procurement is the optimal strategic alignment. Procurement managers must closely interlink procurement objectives/strategies with the overall corporate objectives/strategies in coordination with top management. This "bottom-up" interlinking then leads to a formulation of concrete objectives and strategies for the three core processes of procurement. In this way, procurement objectives/strategies are closely interlinked with each other bottom-up as well as top-down, and they form the solid foundation of a successful Procurement 4.0.
What is alignment of objectives/strategy all about?
When defining procurement objectives/strategies, key points are often overlooked or simply not considered important right from the start, and are therefore only taken into account insufficiently:
- Procurement is not or not consistently aligned to the overall corporate objectives and strategies already specified at executive board level.
- Objectives/strategies are not specified in many cases with regard to content (» What should be achieved?), Extent (» How much should be achieved?) and timing (» Until when should the objective be achieved?).
- Procurement does not implement objectives/strategies in specific requirements for the three core processes (sourcing, supplier management and order process).
- Procurement is almost exclusively aligned to cost optimization and security of supply. Other goals like the improvement of quality and launch of product or process innovations with the suppliers are only seldom pursued or not at all so far.
To support companies in this situation on a sustainable basis in line with targets, HÖVELER HOLZMANN CONSULTING designed the IDEa concept. Backed by IDEa, an industrialized Procurement 4.0 can be implemented with success. When procurement aims to take the opportunity to reposition itself through IDEa, it must lay the foundation in close coordination with top management in the form of precise, measurably formulated objectives and strategies. That’s because only when it is possible to clearly measure the advantages (= objective/strategy contribution) which are created by strategies, for example, for industrialization and digitalization, can procurement count on more support by the executive board/top management.
Based on the overall corporate objectives/strategies and the objectives and strategies developed on this basis for each division/business unit, we define the specific objectives and strategies derived from this with you, taking into account digitalization for each functional area (procurement, product, R&D, etc.). For this purpose, further specifications are pending on four levels:
Since individual divisions/business units often pursue different objectives/strategies, the procurement objectives/strategies are tailored to the individual divisions/business units on the second level.
So that buyers know how procurement objectives/strategies must be specifically implemented for which product groups, suppliers and orders, there are exact specifications for each core process on the third level.
On the fourth level, measures and levers for each core process are finally defined.
How can you convince yourself of the efficiency of an alignment of objectives/strategy?
To gain deeper insights into our approach for the alignment of objectives/strategy for Procurement 4.0, we offer you a one-day workshop which has the following agenda/contents:
- Benefits/purpose of objectives/strategy alignment
- Process to define procurement objectives and the procurement strategy
Conducting the situational analysis
- Identify corporate objectives and strategy as the basic condition/general framework
- Analyze strengths/weaknesses of the procurement department/product group management
Formulation/selection of strategy
- Determine possible alternatives for the procurement objectives/strategy
- Define optimal procurement objectives, strategies and measures using the "procurement objective/strategy cascade"
Implementation of objectives/strategy
- Elements ("procurement nuts and bolts/influencing factors") for the implementation of the procurement strategy.
- Approach to develop the implementation plan for implementation in product group management.