The Skinny on Scaling Services For Procurement Operations

When devising a services procurement strategy it can be difficult to predict the volume and scope of what may be needed to properly achieve your strategic workforce management goals. One best practice for devising and implementing a successful service procurement program includes focus on scalability in the design. Scalability is important if the operation intends to extend procurement reach across the entire organization. Properly executed, a scalable program brings more spend under strategic category management for better cost efficiencies. It also provides better accountability and auditability by extending invoice, payment, and contract controls across a greater number of transactions and overall spend. How best to apply a scalable strategy to your efforts depends on how your broader procurement organization is structured.

For the Centralized/Functionally Aligned Organization, ensure policies and procedures exist to drive activity to a common process. This can include ensuring centrally managed systems and workflows are put in place and that departments adopt and comply with these policies.

The centralized procurement program favors a focus on process integration, alignment and training so that all transactions and activities flow into the central group. Collaborative technology tools underpinned by tested processes are often critical to this step.

With this type of structure achieved, procurement can build skilled teams, each focused on a critical function like sourcing, contracts, vendor management, category management, supplier performance management and others. As volume increases or decreases, this structure is able to flex and accommodate the level of activity with ease while ensuring visibility to the entire group.

For the Decentralized Organization, establish departmental policies and procedures that make sense for each discrete location. It is important that each department comply with its written policies so be prepared to check compliance periodically.

Develop common data architecture, metrics and reporting so that every group is reporting using uniform terms and measures. This step ensures that a central group or “center of excellence” can regularly review the data from across the disparate organization and achieve an accurate big picture assessment of performance.

It is crucial for decentralized procurement programs to provide strong support and guidance so that departments are comfortable and equipped to buy/manage workforce elements with autonomy. The center of excellence model is also a proven effective means for achieving scalability.

The Hybrid Model is one in which the activities involved with services procurement are segmented between the operational portion of the task and the sourcing/vendor/category management portions. For example in one model, procurement operations such as transaction processing, data capture and inputs are managed centrally. However, the sourcing, vendor management and category management functions are decentralized. The hybrid model provides a higher degree of flexibility in pursuit of scalability, especially in organizations utilizing a wide array of different worker classifications across an array of geographical locations.

nextSource experts can assist in determining which scalability model may be most effective for your organization’s particular workforce plan. Ask today about how to boost scalability in your procurement operations.