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What are procurement and strategic procurement?

Procurement is a very crucial part of any business. If you have the best procurement strategy, it will help you improve your business efficiency and reduce any kind of business risk. Strategic procurement, also known as strategic sourcing, refers to a long-term strategy for ensuring the timely delivery of goods and services necessary to an organization's ability to accomplish its primary objectives. In this post, we are going to discuss this in brief.

Let's read it out:

What is procurement?

Procurement is a business management process that is used to manage and source external resources. It helps to identify the need for goods or services, assess and select vendors, negotiate prices, and create purchase orders. As such, procurement encompasses sourcing, which is the process of locating suppliers that can meet specified needs, and purchasing, which is the process of making a purchase.

To optimize procurement activity, businesses use tactical procurement or strategic procurement help. However, tactical procurement only focuses on short-term goals such as purchasing goods at the lowest possible price; on the other hand, strategic procurement focuses on a longer-term focus and prioritizes factors like a strong connection with the supplier.

What is strategic procurement?

Strategic procurement is a data-driven, enterprise-wide process that reduces supply risk while emphasizing an organization's long-term development. It employs a variety of approaches and technologies that extend far beyond unit price reduction.

With the increased strain on global supply chains, a drastic shift in corporate strategy has occurred, with procurement leveraging data and analytics to improve logistics coordination and operations. The main purpose is to meet high customer demand while raising awareness of environmental, social, and governance (ESG) goals that necessitate increased openness throughout the procurement process.

Procurement Strategy Framework

There is no limit to the size of any organization, but there are some common types of procurement strategies any business can adopt, including supplier management and optimization, cost reduction, risk management, total quality management, green purchasing, and global sourcing.

Mostly, the procurement strategy framework needs to have:

Strategy statement: the basis and the rational

Deliver the desired result.

Deadlines and timeframe

A tactical approach for implementing your strategy

Metrics used to assess your process

TCO, SWOT analysis, SCOPE analysis, category positioning matrix, and other techniques were employed.

Conclusion

Hope this presentation is useful for you. Rather, if you are looking for procurement and supply chain consulting companies in the UAE, you can connect with us. Here, we have a professional team to advise you on the best strategy to explore and improve the growth of your business.