Procurement Organizational Design SIG ... - Imperial Logistics · Drivers of ‘Organizational...
Transcript of Procurement Organizational Design SIG ... - Imperial Logistics · Drivers of ‘Organizational...
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1Date: September 2010IMPERIAL Logistics ©
Procurement Organizational Design
SIG Forum PresentationSEPTEMBER 2010
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Agenda
1. What is the ‘Procurement Function’
2. The Procurement Model
3. Organizational Design
4. Procurement Roles
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4. Procurement Roles
5. Skills Requirements
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The Procurement Function
COMPRISED OF:
• STRATEGIC SOURCING
• BUYING OPERATIONS
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The Procurement Function
STRATEGIC SOURCING is a corporate/institutional procurement process that continuously improves and re-evaluates the purchasing activities of a company. It is one component of supply chain management.
The steps in a strategic sourcing process include:
– Assessment of a company's current spend (what, from who, qty)
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– Assessment of the supply market (who offers what)?
– Development of a sourcing strategy (where to buy what, while minimizing risk and costs)
– Identification of suitable suppliers
– Supplier Engagement (products, prices)
– Implementation of new supply structure
– Track results and restart assessment (continuous cycle)
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The Procurement Function
BUYING OPERATIONS
• ‘the replenishment of goods and services on a repetitive
basis. This activity is most often governed by a formal
agreement which is an output of SOURCING activity.’
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agreement which is an output of SOURCING activity.’
• ‘Procure-To-Pay’
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The Procurement Function
WHY BOTHER?:
• STRATEGIC SOURCING
– Realise commercial benefit (SAVINGS)
– Manage risk
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– Manage risk
• BUYING OPERATIONS
– Process efficiency
– Cost and Service Level
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Value of Procurement
Profit Centre: NOT only a Cost centre
• Spend on goods and service ranges between 30% and 80% of total revenues
• Savings on spend fall directly to the bottom line
• A 10% to 20% saving on spend has the same effect as a 50% to
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• A 10% to 20% saving on spend has the same effect as a 50% to 100% increase in revenues?
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What Comprises ‘Structure’?
�The Procurement Model
�The Organizational Design
�Roles
�Skills Requirements
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�Skills Requirements
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What Comprises ‘Structure’?
The Procurement Model
– Centralized – total control
– Decentralized – total faith/disinterest/necessity
– Centre-led – Strategic ownership
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– Centre-led – Strategic ownership
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Drivers of ‘Procurement Model’
CENTRALIZEDRisk Management
Order Fulfillment/SLA
Cost Mgt Requirements The Procurement Model
STRATEGY & INTENT
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Supply Capability / Coverage
CENTRE-LED
DECENTRALIZED
Risk Management
Skills Availability
Supplier Management
Social Responsibility
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Leverage
7
High
Bu
sin
ess
imp
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Re
lati
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Va
lue
6
14
Strategic
4
Wave 1 Commodities
All Commodities
Drivers of ‘Organizational Design’
The Organizational Design
– The maturity of the procurement function
– The authority at centre – Mandate
– Commodity Profiles
– Ownership defined by geographic range
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Non Critical Bottleneck7
Low
Bu
sin
ess
imp
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Re
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Supply Chain Risk/ComplexityHigh
15
4
5
98
10
3
2
– Ownership defined by geographic range
– Ownership defined by commodity
– RACI – Responsibility, accountability, consultative
requirement, Informative requirement
– Policy and other protocol
– Technology
– Performance Measurement
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SENIOR MANAGEMENT
EXECUTIVE OPS / FIN
SCM/CPO
COMMODITY MGR 1
COMMODITY MGR 2
BUYING OP’S MGR
COMPLIANCE MGR
SUPPLIER DEVELOPMENT
Drivers of ‘Organizational Design
HEAD OFFICE
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OPERATIONS
STAKEHOLDER
MGR 1
CFST CFST
MGR 2
CFST
OP’S MGR
BUYERS
EXPEDIATORS
ADMINISTRATORS
MGR
CONTRACT MGT
REPORTING
DEVELOPMENT
SUPPLIER MGT
BEE
SCALESOURCING
REGIONAL/COUNTRY PARTICIPATION
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Operations Manager
Supply Chain Manager
Head Supply
Chain
Management
Drivers of ‘Organizational Design
COUNTRY/REGION/BRANCH
REPORT TO HO
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Procurement Manager
Buyer 1 Buyer 2Supplier
Development Specialist
Logistics Manager
Senior Inventory Controller
Junior Inventory Controller
CFST Membership
NB! The Logistics Manager Position may not be justified in every country
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Drivers of ‘Role’ Definition
‘Role’ refers to the requirements associated with a position
in terms of:
• Ownership/Responsibility
• Deliverables
• Reporting lines
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• Reporting lines
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Drivers of ‘Role’ Definition
Typically defined by:
• Mandate – muscle/importance
• Scale – how much of what and where
• Complexity – process, politics, commerce
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• Complexity – process, politics, commerce
• Technology – enablement
Operational ‘job descriptions’ are the next level.
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Drivers of Skills Requirements
Skills Requirements are defined by:
• Role
• Content
• Industry
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Skills requirement definitions are important in order to:
• Make the correct investment
• Formalize development plans
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Questions
?
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?