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Purchasing organization

Particularly in companies which predominantly use indirect contracts for services and materials, the value-added potential of a well-functioning purchasing organization is often not fully exploited.

Increasing competitive pressure and shrinking margins are forcing companies to focus increasingly on potential savings, especially in operating costs, but also in respect of investment and process costs. But where should purchasing levers be used? Firms are often beset by a lack of transparency regarding the costs that an organization can actually influence. What are the most effective practices with regard to structural and/or process optimization? What makes more sense: to re-organize or to restructure the purchasing department?

Problems

  • Unclear cost structures – non-existent allocation of costs to product groups and lack of spend tracking make it difficult to identify the savings potentials that can be achieved by the purchasing department and to develop specifically targeted product group strategies.
  • Lack of product group management – insufficient focus on the often already scant resources of the purchasing department prevents the development of the necessary expertise and effective organizational structures, causing the value-added potential simply to fizzle out. There are also no valid ways of measuring what little value-added contribution the purchasing department does manage to make, and any easing of budgetary pressure can’t be effectively taken into account in new plans.
  • Maverick buying – departments and projects procure goods and services without direction from outside, often spending unnecessary amounts in the process. This is often due to a lack of suitable, IT-supported procurement processes and to unclear guidelines and a lack of controlling competence on the part of the purchasing department.
  • Lack of legal and audit security – caught up as it is in the day-to-day business, the important contribution of purchasing to ensuring compliance is often neglected. Procurement guidelines, contract documents, RFP documents, GTCs and other important documents don’t meet the required standards and expose the company to unnecessary risks.

Solution

  • Intero Consulting will help you analyze and categorize your costs. Using an appropriate product category code, costs can be allocated and, based on many years of project experience, potential savings identified.
  • If the main categories are identified by type and scope, purchasing strategies specific to product categories can be developed and the corresponding savings initiatives implemented in the operative and strategic planning horizon. The implementation of savings tracking in close cooperation with the Controlling department will enable the full contribution to the easing of budgetary pressures to be exploited.
  • Analysis of the current processes identifies inefficient activities. Redesigning the processes and mapping them in a procurement process system revised in this way forms the basis for operational implementation. Digital support for the processes by implementing suitable IT tools with a strategic development focus will at the end of the day ensure an optimal purchasing performance.

Results

  • Transparency regarding the procurement volume and realistic targets for the potential value-added contribution of the purchasing department, and clarity concerning the savings to be made and the actually usable budgetary relief
  • Lean and effective procurement processes and organizational structures that make optimal use of staffing resources.
  • A planned, strategic approach to the execution of procurement projects and savings initiatives and an increase in the maximum value-added potential.
  • The perception of the purchasing department as a strategic partner to the specialist departments and project managers – not only in the protection against contractual risks, but also in supplier management and in cost management and controlling.

Our other competences

Procurement

Achieve optimal results, in any negotiation position

Cost Management

Understand and optimise costs

Transformation

Successful communication and strategic change management

IT Management

Secure IT operations and leverage innovative technologies