Exploring the Not for Profit procurement differences

Contents

1Introduction

I took on the challenge of writing a condensed version of all the current Procurement challenges. Basing this on the many articles I have read covering this subject. I rapidly came to the conclusion that these articles were excellent at the helicopter view of the challenges, however seemed unable to apply categorisation to the challenges.

I believe the issue with these articles is the broad range encompassed by the word Procurement and the constant change within this domain. To my mind, your challenges depend on where you are in transformational change within your organisation, the scope of your function within Procurement and the nature of the organisation’s supply chain.

For example, is your focus on strategic long-term supply relationships to support your manufactured product? Or are you perhaps focused on the supply of marketing branded goods?

These two procurement domains have distinctly different challenges. Yes, there are areas where you can identify common challenges across key procurement domains such as technology, market intelligence, organisational alignment and cost reduction.

However, there will be fundamental differences in the challenges that are faced as you dig down below these headline terms. Plus, they will both be experiencing distinctly different change dynamics.

So, my article started to balloon into a much wider piece and I therefore decided to tabulate my thoughts rather than write a long-winded article. Condensing the thoughts into bullet points.

The following tables are my first attempt to do this and I would welcome any feedback (chris.haddock@claritum.com), so that I can improve and develop this model.

2Breaking Down the Domains

So, let’s start this article by breaking down the domains by nature of purchases. If we can do this, perhaps, we can then start to align challenges with these domains at a slightly lower layer than the obvious headlines.

These domains are not your classic procurement categories. These classic categories are aligned within the domains I am defining. Here we are trying to group categories that would have similar challenges.

The following table is my first attempt to do this and I would welcome any feedback (chris.haddock@claritum.com)

Procurement Domain Name

Procurement Domain Description

Manufacturing supply

Supply of parts for a product

Process supply (commodities)

Purchasing raw materials that are needed within a process industry (for example oil or chemicals)

Marketing Supply (Hard)

Physical marketing goods that are necessary to promote your business

Infrastructure (Hard)

Office space, machines, uniforms or physical tools that are necessary for your business to function. These have a longer shelf life, unlike consumables below.

Infrastructure (Soft)

Software tools that are necessary for your business to function

Resourcing

Purchasing resource time of people. This would include consultants, marketing agencies and accountants for example.

Utilities

Gas, water or electricity for example

Travel

Travel related requirements for employees

Consumables

This would include, for example, office supplies and any food/drink for office consumption.

Logistics / Freight

The purchases associated with the physical movement of goods sits here. Note: warehousing and lorries would sit as infrastructure (hard) and software as Infrastructure (soft)

3Identifying the Challenges by the Domain

For this section there are two charts. The first chart identifies those challenges that are across all the domains. The second identifies the more detailed challenges that are unique to the domain.

Procurement Domain Name

          Common Challenges Faced

 

 

 

 

Manufacturing supply

Process supply (commodities)

Marketing Supply (Hard)

Infrastructure (Hard)

Infrastructure (Soft)

Resourcing

Utilities

Travel

Consumables

Logistics / Freight

  • Constant change and need to remain flexible
  • Cost (value) management
  • Corporate Social Responsibility (including Ethical, green and sustainable supply)
  • Market Intelligence
  • Effective procurement data analytics
  • Process Optimisation
  • Risk Management
  • Strategic alignment to the Business goals
  • Stakeholder engagement
  • Brand and Public image impact of procurement decisions
  • Knowledge of technology impact on sourcing (innovation opportunities)
  • Knowledge of technology impact on logistically how and physically what you are sourcing (innovation opportunities)
  • Securing Procurement Talent

Procurement Domain Name

          Specific Challenges Faced

Manufacturing supply

  • Identifying current and future critical supply chain risks and mitigating these (government, financial and environmental impacts on supply for example)
  • Multiple / global sourcing of critical components
  • Supply chain optimisation (time and cost) and development
  • Becoming a customer of choice
  • Potential impact of competitors on the supply chain
  • Change management – product/tools/people/organisation

Process supply (commodities)

  • Points as above. Key distinct difference is the nature of the supply of raw materials often includes additional intelligence on political dynamics.
  • Risk management through buying or reserving natural resources at key times, based on prediction (Intelligence)

Marketing Supply (Hard)

  • Efficient and effective order capture
  • Speed of supply
  • Real time data
  • Reach to multiple potential suppliers
  • Enabling the Marketing team to purchase

Infrastructure (Hard)

  • Efficient and low cost Rfx process
  • Enabling the organisation to buy
  • Security and Compliance

Infrastructure (Soft)

  • Efficient and low cost Rfx process
  • Security and Compliance
  • Enabling the organisation to buy

Resourcing

  • Enabling the organisation to buy
  • Agency contracts / legal conformance
  • Controlling rates and margins for temporary resources
  • Expense control of temporary resources

Utilities

  • Usage forecasting and control
  • Managing the shift to renewables
  • Supplier selection over fixed term
  • Continuity of supply
  • Some element of government impact on supply (risk analysis and mitigation)
  • Weather impact on consumption levels and supply continuity (risk analysis and mitigation)

Travel

  • Enabling the organisation to buy
  • Controlling Maverick spend
  • Automated or fast sign off process
  • Remote / mobile access

Consumables

  • Efficient and effective ordering process
  • Controlling Maverick spend
  • Enabling the organisation to buy
  • Automated sign off process

Logistics / Freight

  • Identifying current and future critical supply chain risks and mitigating these (government, financial and environmental impacts on supply for example)
  • Logistics/freight supplier selection typically over a fixed term
  • An element of enabling the organisation to buy: in terms of using approved couriers

4Conclusion

I do not believe that these tables capture all the challenges to the level of detail necessary and would love, as previously stated, to get feedback on the specifics of each domain. Chris.haddock@claritum.com

I hope you found this article interesting.

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