3 factors affecting procurement planning

21 Jun 2016
Article by Achilles

Achilles’ Debbie Metcalfe LLM MSc MCIPS, Trainer and Advisor, shares her tips on successful procurement planning and it’s all in the analysis.

The Procurement Plan is the product of the procurement planning processes, which is about identifying which supplies, services or works need to be procured over a defined future timescale; this is sometimes referred to as ‘the work plan’. The work plan will identify individual projects to be tendered over a given time period which should be scheduled in relation to deadlines and available resource.

To ensure each scheduled tender runs successfully, strategic planning is essential. Procurement practitioners should undertake what is known as scoping or pre-procurement engagement work to ensure the actions they take are appropriate to meet the commercial business requirements and conditions at that time. These steps require engagement with the market, as well as end-users and stakeholders to make sure the planned work achieves its desired results.

1. Market Analysis

Before devising a procurement plan, it is vital for the buyer to have a strong understanding of the market dynamics of the industry they are looking to procure work from.

This means engaging with the market place in-order to understanding the market rivalry. Factors to take into account include looking at whether or not the sector market is going through a period of growth, decline or stagnation.

Market analysis can be time-consuming resource intensive and costly.

An alternative, faster and more economic approach for buyers in the Utility sector is to engage with a pre-qualification platform such as UVDB or Building Confidence which are provided by Achilles. These allow procurement professionals to research and identify the capability and capacity available within market. Buyers are also able to use a Qualification System Notice (QSN) to attract new market participants to develop the market.

2. Spend Analysis

Without visibility of spend data, it becomes difficult to accurately analyse the goods and services that have been historically procured, and therefore it becomes more difficult to forecast accurately purchases for the future.

Essentially, spend analysis is the process for analysing the organisation’s non-pay historical spend. The analysis will disclose issues concerning spend visibility, contract compliance and control.

It is important that the spend analysis promotes the alignment of the procurement sourcing strategy with the commercial corporate strategy, both working to the same vision.

The procurement team needs to make sure that the spend analysis informs all future sourcing strategies to ensure up and coming contracts leverage significant benefits for the organisation, adds value and allows it to recognise areas where savings can be made and innovation achieved.

3. Needs Analysis

It is important to identify the ‘need’ and not the ‘want’, ensuring a clear understanding and have agreement for the context.

All team members need to be on the same page with regard to the motivations behind the procurement plan to ensure all relevant parties are properly engaged with the project. This means pulling together a multi-disciplinary stakeholder group and clearly understanding their relationship with the intended project, and their relevant characteristics and input.

To summarise, it is important for buying organisations to remember that successful procurement planning is all about matching market knowledge with demand via analysis.

At Achilles, we can help you with your procurement planning, whether it is via training courses, consultancy or through joining one of our communities to help you with your market research.

To find out more about how we could help your organisation, get in touch with us today.


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