What it is, when it makes sense
In several chemical companies, the procurement function has undergone significant changes in the last 20 years: centralization, introduction of strategic procurement and category management, standardization and automation – through several generations of ERP systems – outsourcing of tactical and transactional activities to specialized companies (e.g. GenPact), succeeding in optimizing almost everything within its traditional functional boundaries. At the same time we still observe many chemical companies that have only begun to transform their procurement departments into state-of-the-art organizations. While these „late-comers“ should ask themselves how to quickly bridge their gaps in procurement and where the main sources of values are for them, the „front-runners“ have a more comfortable, although more insidious, question: what´s next?
We have conceived our „Procurement excellence“ approach to help both late-comers and front-runners addressing these questions, and bringing their way-of-doing-procurement to the next level.
What you get
Our typical „Procurement excellence“ engagement delivers three items:
- Procurement diagnostics, g. a comparison with peers from the chemical industry of key performance indicators (such as purchasing spend per buyer, % of „maverick spend“, delta on lead-prices, etc.) as well as functional practices in procurement and organization models adopted, with the identification of strengths and weak points.
- Map of opportunities, i.e. the list of potential improvements (e.g. different workflows, better tools, new organization, outsourcing, strategic alliances, etc) that would bridge the gap, incl. a description of each case (estimate of benefits / costs / implementation time / resources).
- Prioritization alternatives & planning e. the ranking of opportunities based on different criteria such as return on investment, costs, ability to implement, sustainability, risk, as well as a potential sequencing of implementation of the different realization projects, the operationalization of the activities necessary to achieve the project goals incl. breakdown in feasible workstreams and actions with responsibilities and dates.
- Progress tracking and reporting, e. the translation of goals into objectives both of financial and non-financial nature, the attribution to different teams, and the installation of weekly / monthly progress and deviation reporting.
- Ad-hoc expertise on selected projects– where necessary, i.e. the subject-matter input on strategic questions such as investments & upgrades, workflow adaptions, network realignment, organization design, and alike.
How we work
The engagement duration varies in relation to the scope, usually between 6 and 18 months. We often organize our projects in phases – or „waves“ – addressing one-three categories / regions in each wave. The staff is tailored to ensure the right competences are on-board, typically:
- One-four experts in chemical procurement
- One senior project manager with experience in chemical procurement
- One project management office (PMO) support – in some cases the role is carried out by the senior project manager.