Businesses should determine the right size for their procurement departments through the pragmatic application of sound principles, say consultants Efficio.
In its latest Viewpoint article Efficio says benchmarking other organisations is not the best approach as it may simply be a case of "the blind leading the blind."
Efficio Vice President Juraj Priecel says business leaders usually understand what their procurement departments do but are often unclear what size they should be.
In the Viewpoint, titled Measuring up: How big should your procurement department be?, Priecel says there are broadly two approaches to answering this question.
The "top-line" approach examines the potential value an organisation can generate through strategic sourcing initiatives or through professional supplier management and ensuring that negotiated deals are enforced.
The "bottom-line" approach looks at the number of categories being managed and spend areas or projects to be addressed, as well as their complexity, in order to determine the size of the team that can perform the work that needs to be done.
Other factors include the relative maturity of the procurement organisation, the quality of people employed, the organisation's geographical spread, the relative sophistication of the IT systems and the effectiveness of interaction within the business and recognition of procurement as a “strategic” function.
Priecel concludes: "Building an effective case for altering the size of a procurement operation should therefore not be a case of benchmarking but instead a pragmatic and logical application of some sound basic principles that are driven by the specific situation of the business.
"As a CPO or senior executive, one can then rest assured that the procurement department is operating efficiently, producing results, and achieving an optimal ROI."
Notes to editors
Measuring up: How big should your procurement department be? can be downloaded from: http://www.efficioconsulting.com/_uploads/documents/view-poi...
Efficio is a results-focused procurement consultancy with a track record of helping leading organisations achieve more value from their procurement. It is headquartered in London, UK, and has offices in France, Germany, Switzerland and the US.
Efficio combines the credentials of a top tier firm with the depth of expertise of a flexible niche player. Clients include 3i, AstraZeneca, Barclays, BAT, Biffa, British Gas, Ford, Scandic, HBOS, KKR, Nokia, National Grid, O2, Tryg and Thames Water among others.
For more information please contact:
Georgina Golding, Marketing Manager, Efficio, on:
+44 20 7550 5681 or firstname.lastname@example.org
For further information on Efficio please see: www.efficioconsulting.com
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