Much to often procurement organizations don’t even have a procurement strategy let alone a supportive negotiation strategy!
Todays post is by Ron Southard, CEO of SafeSourcing Inc.
What is your procurement organizations overall procurement strategy? All to often, when this author asks this question, the response I get is that deer in the headlights look that says to me there either is not one in place or the person I’m asking the question of has know idea how to answer the question. If there is no procurement strategy, there certainly is no supportive negotiation strategy because how companies negotiate should support their overall procurement strategy or at least it should.
The cause for the above is quite often that there is no formal procurement organization in place to begin with or the function is lost within a supply chain organization, logistics organization or finance organization. And sometimes it is even located in operations and as a result spread all over the place depending on the size of the company.
It’s a good bet that if there is no well defined procurement organizational structure within a company that there are many maverick negotiations going on and that many of the associates conducting these negotiations are not skilled at doing so and don’t have any advanced tools other than spreadsheets, email and telephony to conduct the negotiations with.
The result of the above is a lack of collaboration and well thought out aggregation, maverick buying, expired and or ever greened contracts and much higher than needed cost structures.
So before you can negotiate effectively you will have to go back to the drawing board and develop a procurement strategy. Once that’s in place negotiation best practices can follow.
If you’d like to learn how to do this quickly with executive office support and begin reducing costs in the current accounting period, please contact a customer services representative at SafeSourcing.
We look forward to and appreciate your comments.