The Center Led Procurement Model in Action – The Hub of the Wheel
It’s a key challenge for organizations around the world.
How do procurement and supply chain teams move beyond savings to drive value and revenue growth for the organization?
In the quest to maximize total value for your organization it’s an often overlooked but key focus area. There exists significant operational savings AND revenue potential that requires a deep dive into your procurement and global supply chain operations.
There are many models and organization designs out there to evaluate and deploy within your organization. The Center Led Procurement (CLP) model is our preferred operating model. The CLP model is built on cross-functional teams led by the sourcing and procurement organization. These teams represent the different areas of your organization, aligned by the what, why and how you spend your money.
As we like to say, a center led procurement operating model can provide procurement and supply chain teams freedom within a framework. As always, we encourage some organizational prototypes to try the model and test drive it, to see if there is a strong fit for your organization.
The Three (3) Key Steps in Evaluating and Prototyping the Center Led Procurement Model
- Step 1 – identify and have visibility to your organizations direct and indirect spend.
- No spend visibility means no data to understand and learn from.
- If you don’t have the data, start there to get it.
- Clean data is best, but if it’s messy, it will be wrong but directionally useful.
- If the data is unstructured and needs to be structured work to a wrong but useful structure.
- Step 2 – Categorize your direct and indirect spend into meaningful categories that matter for your operation.
- Each organization will have nuances in important spend categories.
- There is no one size fits all solution.
- If you need a foundational reference, consider aligning initialy to NAICS codes or standards for your specific industry.
- Step 3 – Create very flexible category/commodity strategies that can be implemented at the local/regional level.
- Flexibility in important as you build the initial structure.
- Local and regional satellite sites, especially with multiple regional ERP solutions should align to the same framework.
These initial steps can help you optimize and take advantage of local markets and increase your speed to solution for your customers. You are able to increase your operational efficiencies, and can react quickly to local supply chain challenges or disruptions.
What Are the Long Term Benefits of a Center Led Procurement Model?
There is also a deeper reality in that a strategically aligned and highly trained procurement organization, with proper foundational data education, business systems, tools, and technology can be the functional group to harmonize, scale, and solve long-term challenges that will maximize total value for the organization.
We call this CLP evolution and that occurs over time. The strategy becomes a solution-sourcing approach and standard work playbook.
The objective and mission over time is to develop your procurement and supply chain teams. Shifting away from a tactical focus of getting things to the right place at the right time. The evolution migrates towards a strategic business focus for procurement and supply chain teams.
With a successful deployed center led procurement model, the procurement and supply chain team can become the hub of the wheel and the center of rotation for the organization. The hub that drives long term growth radiating from the center point out, and delivering significant generation of revenue beyond savings.
Ready to Learn More and Explore Next Steps?
To learn more about how The Innovation Garage® can help support your plans for Center Led Procurement and Supply Chain with our 3 phase approach, blended education delivery, and the supporting tools and technology to help. Please reach out to us below.
Take that first step by reaching out to us here or drop an email to [email protected] or check out our events pages to learn more or schedule a private session with us.
At The Innovation Garage®, We help organizations grow. Providing education, tools, technology, and expert consulting in change management for strategy, innovation, and supply chain. Guiding leaders from organizations across the world to intentionally self-disrupt their offerings and organizations. We deliver world-class education, tools, and technology on how to craft business operating systems focused on long-term profitable growth.
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