Neglecting procurement strategies is the equivalent of ‘leaving money on the table’
Effective procurement strategies can help to reduce the risk of potential contract fraud and will also deliver robust processes that are flexible to your organisation’s operating environment, delivering tangible value and opportunities. However, it is common to not have a strategy in place, leaving an organisation open to overcharging from your supplier base.
A previous client hired one of the PKF Integrity team members to establish a procurement strategy, after the organisation had experienced a fraudulent incident and was leaving itself exposed. Four years later, this strategy resulted in and the establishment of a procurement joint venture company that would provide a further tangible of $43 million over five years.
The savings can be achieved by establishing an operational framework under which procurement will be implemented across the organisation. Focusing on four guiding principles in all procurement activities: value for money, leveraging contracted opportunities, being quality driven and building strategic relationships. These guiding principles form the cornerstone for all activities from developing business requirements, contract negotiation, tender management and supplier relationship management.
Once the operational framework for all procurement activities is established, you can then identify quick wins around cost savings and process efficiencies, whilst also building medium to longer term goals to really lift procurement across the organisation. More importantly, effective procurement strategies change the culture of an organisation, lifting the value and importance of spending the organisation’s money ethically whilst removing any current instilled casual and/or adhoc approaches.
This change ensures professionalism and accountability across the business, sharpening the focus to ensure money is not ‘left on the table’ through tasks such as: effective quoting, contract negotiation and supplier relationship management. These strategies bring dollars back to the business and give employees a sense of pride and satisfaction on delivering the right outcomes for the organisation.