Objectives for a Purchasing Team
Posted on 7th September 2020 at 19:21
Objectives for a Purchasing Team
Everyone knows that the basis for setting objectives for a team is to ensure that they are SMART but where do you start if you haven’t had any to begin with?
Thinking about them from the view of the performance you want to drive can be of benefit. They clearly need to be linked to the overall business objectives in order that they are seen as relevant. Writing them in the language of the business that you are in will ensure that they are credible. And making sure that you talk about them throughout the year means that they are seen as important. They need to be achievable but at the same time stretch the individual, allowing them to progress and enrich the scope of their role within the organisation.
Measuring the outcomes of these objectives means that you are looking at what you are delivering to the business and the impact that you are having.
But what should they be based on?
The primary function of any purchasing department is to lower costs and provide savings. At the start of this process it may be necessary to complete a spend analysis for the business if it hasn’t been done in the last 6-12 months. By gaining transparency in what your company spends, and how the cash is spent, will allow you to negotiate contact improvements as well as identifying if you are over-buying to make up for quality issues.
Managing your supply chain involves understanding where there are risks and at least developing a plan on what to do about them. The 4T matrix – Treat, Terminate, Transfer, Tolerate – can be used to map the Likelihood of occurrence against the impact of the incident, resulting in Low/Medium/High/Extreme assessments.
This might be directed internally into the business as well as externally with suppliers. Working with internal stakeholders, for example finance, warehousing and production ensures that the whole business is aligned to any savings that are identified and that changes in purchasing strategy are bought into by the whole business
Based upon the 5 rights of procurement – you might get the right price but be well away from getting the right quality. If what you are buying is having to be re-worked inhouse or returned to the vendor to be replaced, any savings will be very swiftly diminished by the inefficiencies of the process. Learning to understand what quality levels are expected by your business and helping your vendors to develop their processes to improve quality will help share the benefits of improvements.
INNOVATION AND TECHNOLOGY
Understanding where your business is and where it wants to be in the market place will enable you to help achieve the competitive advantage that it is looking for (Porter’s Generic Competitive Strategy of Cost, Quality or Speed). Developing an objective around achieving this Competitive Advantage will enable the Purchasing Team to provide innovative ideas to Management Teams, enabling the profile of the team to be elevated within the business.
Pro Outsourcing has worked with a number of clients to help develop objectives for Procurement Teams around these five areas, enable staff to understand their worth to a business and how their work compliments the objectives of the company as a whole.
Tagged as: COST SAVINGS, INNOVATION, objectives, procurement, QUALITY, RISK MITIGATION, SMART, SRM, supply chain, TECHNOLOGY
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