Have you ever wondered how mature your procurement department really is? It may have only been set up recently or been up and running for several years. It’s not always true that the longest serving departments are the most mature. Rather, the most mature procurement departments are the ones that have adopted and implemented effective processes, management policies, and clearly defined goals. They can also be the ones that have embraced technology to assist, such as online vendor management systems.
Below are four benchmarks that a mature procurement department should have in place. You can assess you department’s maturity by comparing the status of your department against the four benchmarks; this will allow you to identify any areas of improvement.
In most mature procurement departments the head of the department should deal directly and report to someone on the executive team, such as the Chief Financial Officer. In order to achieve accountability within and external to the department, there should be a clear chain of command with defined measurable objectives and goals. This ensures the team can consistently apply the set processes in the absence of management.
Strategy and Process
A mature procurement department will have a clearly defined strategy in place, and a separate strategy focusing on procurement. However, it must be aligned to the organizations overall strategy, goals, and values to ensure congruence. Mature procurement departments also have well defined processes and have trained employees on those processes. Well established processes create an efficient working environment and lesson stressful situations of indecision when management are not around.
Mature procurement departments will have some form of alignment with a quality management system if only informal. With that, internal auditing is a key benchmark for procurement departments to have ongoing evaluations of their performance against set criteria and to identify key areas of improvement. But it’s not all about formal auditing; mature departments will also have feedback systems built in to gather critical information both from internal stakeholders and external customers.
Measuring performance is also a key component of mature departments in ongoing evaluations. Quantifiable numbers and measurements are used to track performance against set goals and objectives and also assist in identifying areas for improvement.
An unhappy workforce is an unproductive workforce, and disengaged employees can lead to high turnover and the potential for increased accidents and mistakes. Untrained employees, undefined processes, and a lack of understanding of strategies and goals can cause all sorts of issues, delays, and confrontations in the workplace. Therefore, staff training is a key component of any mature procurement department. Training must include the procurement processes, documentation, and outputs.
Most mature organizations will implement engagement surveys or employee satisfaction surveys and make improvement based on employee feedback from the surveys. Mature departments will also build career advancement and industry networking into employment contracts allowing staff to attend industry seminars and such to keep up to date with the latest going on in the procurement industry.
You may feel that your department meets these benchmarks right now, but don’t get complacent. It’s just as important to continue to re-evaluate on a regular basis. Markets and technology are constantly changing and these may have an impact on your department and completely change your existing processes, so it’s important to remain on top of the game.