Procurement Value Proposition
What use is success if it isn’t transparent and correctly positioned in the company?
These days, the significance for a company’s success of its procurement value proposition is no longer restricted to good bargaining outcomes and cost savings, because purchasing departments are increasingly involved in developing and implementing corporate strategy at the procurement level. In this context, the spotlight is increasingly on aspects such as guaranteeing supply security, efficient and integrated procurement processes and meeting sustainability requirements. The main focus of procurement has shifted from merely minimizing costs to maximizing value.
This role change means that purchasing departments need to take a new strategic direction – not only when it comes to the question of how the value proposition of procurement can be measured in a meaningful way in light of this paradigm shift, but also regarding buyer management and the way in which successes are communicated within the company. Further challenges which purchasing departments are increasingly faced with include the implementation of sustainability guidelines in connection with ongoing pressure to reduce costs, as well as an increasingly interdisciplinary collaboration with the finance department for purposes of payment term management or external inventory financing.
Camelot will assist you to develop a coordinated approach to these challenges, and help you to maximize your procurement value proposition in light of these new challenges.
At Camelot our main focus points in the area of procurement value proposition are:
Supply Performance Management
To show the “actual” performance of the procurement department all influences and conditions need to be made transparent. This allows to identify the objective results of purchasing activities. Supply performance management evaluates the procurement department’s performance adjusted to general market developments or other internal conditions.
The procurement department’s new strategic objectives must be reflected by corresponding performance indicators and in budgeting and management processes.
Based on project proven standards, our consultants will develop a tailor-made performance management system together with you. We also assist you in the organizational implementation of the concept with our extensive change management experience.
Sustainable Sourcing
Sustainable sourcing focuses on ecological standards, but also on social and legal standards for which compliance is becoming more and more of a prerequisite for competitive business models. There are very few businesses that can afford to ignore these requirements. Purchasing plays a decisive role here, because it is responsible for the most demanding part of the process: ensuring that suppliers outside of the company comply with corporate guidelines.
Corporate guidelines have to be integrated into all procurement processes to guarantee compliance with them. One-off initial supplier qualifications or complex legal contracts are not enough to obtain long-lasting compliance.
Rather, you need to establish efficient control mechanisms that are continuously applied both in the strategic and operational procurement processes.
Our experienced consultants can help you define and implement sustainable sourcing guidelines and enable you to create an efficient system of control to ensure sustainability and compliance on the purchasing side.
Payment Terms Management / Inventory Financing
Many enterprises are increasingly focusing on the optimization of working capital and liquidity. On top of that, the current restrictive credit policies of the banks are aggravating the (re-) financing capabilities of many companies.
The procurement department can make a considerable contribution to increasing liquidity and improving the operating cash flow of an enterprise through active management of payment conditions and innovative concepts for stock financing.
The purpose of payment terms management is to give buyers a tool that lets them compare financial impacts of price and payment terms changes simultaneously.
On the other hand, inventory financing deals with the possibility of inventory (pre)financing for suppliers through the purchasing company or third parties (e.g. logistics service providers) and focuses on creating a win-win situation for the supplier and its customer.
Our experienced consultants will assist you with the conception and implementation of liquidity management strategies for procurement. This covers programs designed to improve payment turnaround times, reviewing concepts for consignment stocks, vendor managed inventory (VMI) or bank and third party financing. The collaboration of specialists from our sourcing & procurement, logistics, manufacturing and sales management service lines has proven to be valuable in practice. Cash flow can only be significantly and permanently improved by an integrated approach.