How To Build a Reliable Digital Procurement Strategy in 9 Easy Steps

A digital procurement strategy is arguably the most sought-after and popular idea in the procurement industry. It is a long-term strategy that can help businesses get the needed supplies from a list of effective suppliers cost-effectively. 

Procurement strategies primarily rely on available budgets, possible risks, purchase timeline, the total cost of ownership (TCO), etc. And their main focus is to mitigate risks, expand organically and reduce costs. 

According to a study, More than 75% of CPOs globally recognize cost reduction as their topmost priority procurement strategy. However, the processes involved in creating and developing an agile and reliable procurement strategy are challenging. According to the team at https://www.gatekeeperhq.com/ there are many factors you need to consider before coming up with one that works. To get you started, check out how you can build a reliable digital procurement strategy in nine simple steps.

1. Apply a Procurement Software

Procurement software is cost-effective. Companies will spend more if they handle their procurement process manually. However, they are also prone to late payments and human errors. 

Procurement software will help to improve your employees’ productivity significantly. It will also reduce errors by eliminating associated inefficiencies and manual data entry. Procurement software will also help enforce policy compliance without any manual interference and identify and solve process gaps. 

2. Analyze Your Company’s Finances

The first step to building a reliable digital procurement strategy is to analyze the spending culture of your company. To do this effectively, you have to collate data from suppliers, shareholders, and every other party involved in the digital procurement process. 

The data you collate will serve as the foundation of your procurement strategy and function as a company’s knowledge center. For example, using tools like Total Cost of Ownership (TCO), you can identify and analyze the unknown or often missed costs that a service incurred plus the inceptive purchase cost using tools like Total Cost of Ownership (TCO). 

3. Determine Your Business’s Needs

It is vital to have a clear understanding of your business’s needs before building an effective digital procurement strategy. This will help you implement and prioritize your digital procurement strategy over your other business goals and functions. 

If anything questions the obvious or challenges the status quo, you will identify more saving opportunities. In addition, you can locate core business demands that you will apply when building your digital procurement strategy using tools like a category positioning matrix. 

4. Carefully Evaluate Market Conditions

The above steps are internal analyses that will help you know your company’s needs. The next step is to do an external analysis of the markets and their conditions. The information you will need will be collated from potential suppliers and your current suppliers. 

Ensure the data you collated are up to date if you want to stay relevant. You can use techniques like the SCOPE analysis and Porter’s five forces when doing this step. This step will be easy if you follow the market trends closely and get to know your suppliers better. 

5. Set Clear And Achievable Goals And Objectives 

After you have identified your business needs, the next step is to set objectives and goals you want to achieve. Again, the information you collated in the previous steps will be of immense help in creating a clear vision of what you want to achieve. 

After making clear and achievable objectives, sort them according to their impact on your company. You can recognize the present state of your procurement functions using tools like SWOT analysis. For example, you can apply procurement software to transparentize the procurement process and reduce maverick costs.

6. Define Your Digital Procurement Policies

Create a list of digital procurement top practices that will help in eliminating existing inefficiencies. One good way to start is to alter your procurement policy to tackle the risk you discovered during the SWOT analysis. 

Ensure you avoid starting from scratch when creating a procurement policy for your company. Instead, you should research and add templates of existing procurement policies online to fit your company’s needs. 

The primary purpose of a procurement policy is to provide solutions for possible violations and offer guidance on objective practices to everyone involved in the process. Ensure you keep this in mind when creating your own. 

7. Draft a Procurement Strategy

Draft a procurement strategy with the data and information you have gathered. Next, list your desired objectives and plans to achieve them. Ensure these objectives are time-sensitive, measurable, above all, achievable. 

In your plan, outline techniques you will employ to achieve those goals. You can also add a big idea that will push the boundaries of limitations and boundaries in your procurement strategy.

8. Develop a Digital Procurement Strategy 

After you have drafted your procurement strategy, the next step is to develop a digital procurement strategy. In this step, you will need to update your procurement process, technology, strategy, skills, talents, and supporting systems. 

It should be considered a priority since applying a digital procurement strategy helps you spend more time with your suppliers and the calculated part of procurement instead of transactions and administrative assignments. 

A proper digital procurement strategy will help you utilize your business’s resources to get profits and make your procurement price active and reliable. 

9. Execute, Manage And Improve The Strategy

The next step is to execute your digital procurement strategy after you have developed it. As you execute the strategy, it will require the involvement of other business positions such as HR, Sales, Admin, and Finance. And after you have implemented the digital procurement strategy, you will need to measure and track its progress and success. 

Final Thoughts 

An adequate digital procurement strategy should challenge the existing conditions and focus on new methods that deliver process efficiencies and cost savings. And while automated tools can help you minimize risks and yield excellent results significantly, you still need to develop a digital procurement strategy that works. Then, you can use the highlighted simple steps above to build and create a proper digital procurement strategy that will fit your business needs.