Estimation – Godinterest

Some senior members of staff see procurement expenses as a necessary evil and overlook any efficiency improvement methods for this sector. This is not an uncommon way of thinking, as procurement and the supply chain is a massive part of any company’s costs and can total up to 70% of an organisation’s total spend.

These managers are missing out on effective changes that can shift procurement to a significant supplier of growth and profit for any business.

Follow these 7 steps to improve your procurement team.

1. Embrace Change

It’s so important for procurement managers to embrace and invest in technology changes currently taking place in the industry.

Managers should hold a full assessment of deficiencies in their processors and search for technology that meets the needs of the business, rather than fitting the business around new technology. For example, if you are having trouble with historic and retrospective analysis, invest in predictive analytics.

2. Consider Outsourcing

Outsourcing may not be an avenue you have ever considered in regards to procurement, even though it happens all the time with HR and IT departments. Even so, many procurement managers are still apprehensive to apply it to their supply chain.

Outsourcing certain aspects of procurement can be a way of improving existing systems and processors rather than a cost reduction measure. It can also allow your business to access highly skilled procurement experts when it would be counter-productive to hire someone internally. These individuals are often very focused on delivering results, and if you plan outsourcing correctly, the increase in productivity will outweigh the costs of outsourcing.

If a procurement manager feels like there are areas in the business where costs can be cut, it might be worth bringing in a consultant. There are also outsourcing services that offer expert domain knowledge and vendor contact opportunities.

3. Ensure Your Supply Chain Is Properly Staffed

The efficiency of a supply chain is very much dependent on the quality of its staff. As a procurement manager, it’s important to ensure that the supply chain is staffed with highly skilled individuals, and that these staff have regular access to education and training.

Procurement professionals will be tasked with a wide variety of roles, including:

Planning delivery timetables
Ensuring stores have enough stock
Overseeing the arrival of shipments

When hiring employees, it’s important to ensure they have skills such as communication, attention to detail and teamwork. They must also be willing to learn and improve throughout their career.

4. Create Risk Management Policies

One of the key ways of making a procurement team more efficient is to prepare for the unexpected. Procurement managers should establish proper levels of control to manage risk and ensure that all these policies are periodically reviewed. These risk management fail safes should include:

The financial impact a risk might have
The likelihood to the risk occurring
A priority list for managing risks

All staff members should be aware of these risks, and the processes in place if the risks occur. For example, if a major supplier goes out of business, your staff should be aware that there is a process for contacting secondary suppliers so you are never left without stock.

5. Establish Relationships with Key Suppliers

Staff who deal with suppliers on a daily basis need to have brilliant relationship building skills. Procurement employees need to work closely with suppliers to try and keep communication consistent and amicable, even if issues arise at either end.

Suppliers can help procurement teams reach their performance goals, and they are often very knowledgeable, with expertise to share about their products. Procurement teams can learn a lot from them, like the audience, seasonality and key selling points of products; it’s worth working on these relationships.

6. Stick to Ambitious but Manageable Targets

If a team has a tough but not unattainable goal to work towards they can prioritise, measure and focus on their tasks with a clear end in mind. This helps staff members feel more motivated and gives meaning to their work.

There will also be a sense of achievement when the targets are met, bringing your team closer together and improving teamwork.

7. Efficiency Is Attainable

The creation of a brilliant supply chain depends on your company’s understanding of procurement, along with the procurement team’s estimation of the total costs associated with each supplier and their contacts.

With help from technology, outsourcing, a great team and strong relationship building skills, your procurement team should improve its efficiency and business impact.

1) A Wise Man Said Only Fools Rush In

Companies that goes nuts for agile because they know they have to deliver faster and for less cost to keep up with competitors may be making a big mistake and face a collapse of their efforts.

If they focused first on a deep understanding of their business’ needs, they could more accurately decide if agile is a good fit. A better approach for you to take is analyse your current processes to determine if agile methodologies actually support your goals and needs.

2) Educated Stakeholders Make Excellent Allies

Agile works from a focal point of improving quality delivery and frequency. It does not start with reducing time to market or cutting costs. Those benefits are a result of implementing agile methods over time, after the requisite investment of time and resources has been made.

3) Don’t Do the Project Without at Least One Committed Product “Owner”

A “product owner” is a the committed business leader who will make or break the project. This person will be expected to put at least half of their time into the project. They’ll also be responsible for getting all the decisions made through the right channels in a reasonable period of time. You must have a leader like this to succeed.

4) Gain Consensus on the Definition Of “Finished”

Everybody on-board needs to agree on what constitutes being finished with any stage of implementation. For some, it will mean that by the end of each and every iteration, the production-ready software will be available. This is not always possible, so get out ahead of a potential problem and gain consensus.

5) Build an Exceptional Cross-Functional Team

Cross-functionality is what separates the ineffective agile teams from the high-performance ones. Team members have to be proficient in performing any and all necessary tasks so that they’ll be able to always deliver what the customers need.

Team building requires that you identify the right parties and that you shape them into a functional team by making sure that they share your own true goal of always delivering massive value to product owners.

6) Make the Proper Investment in the Tools That Support Agile

The beginning stages of any agile project will involve you investing in the of the robust frameworks, infrastructure, and process automation tools that fully support agility. This includes a wide range of solutions like continuous build servers, automation testing, video conferencing, interactive chat, and software frameworks. Don’t scrimp on other important details like the solution architecture, either.

7) Retrospectives Need to Be a Main Priority

Inspection and adapting are the keys to agile. Organisations using this methodology use a vehicle called “retrospectives” to ensure these tasks are being performed correctly. A proper retrospective should embrace the qualities of self-improvement and transparency. Any actions that are a result of the retrospective must be given the highest priority. This is especially true of estimations, which are crucial to achieving the kind of team velocity that keeps projects on track.

8) Start the Project with a Solution Architecture

Even though documentation is not always the most glamorous part of any project, you’ll be well served to make sure you understand that documentation is still important to a successful project. Using a solution architecture pays off because it serves a blueprint for the final project that will be delivered by the team. Team members need this document so they understand what will happen if they make changes. Members who are added to the project at later days will use the documentation as a reference point so they can be brought up to speed.

9) Embrace the Fact That Change Is Coming and Plan for It

You can’t make a change without a cost in agile. Change is something you always have to embrace philosophically, but be aware of the costs and the impacts to the project. When you are doing the estimation process, factor in potential changes when applicable.

10) You and Your External Partners Should Have an Agile Relationship

Agile is not always the best fit for traditional vendors. They prefer contracts that use fixed prices and fixed outcomes. When you switch to agile you’ll need to make a point out of understanding the ramifications the changes will have with your vendors. You and they may have to make some changes to keep the relationship running smooth.

Try to build a transparent relationship with all of your external vendors. Risk Reward contracts that employ clearly defined KPIs work amazingly well for agile organisations.

Tag: Estimation

7 Secret Things You Didn’t Know About Successful Procurement Teams