Procurement executives are having to stretch ever more constrained budgets and spending power while simultaneously ensuring that risks and exposure are reduced and money is spent in a smarter and more productive fashion. It’s always been the case that it’s not how much you spend, but how you spend it that matters – and that’s never more true than when money is tight. Mastering procurement, and the application of optimised technologies and practices help companies meet this challenge and achieve broader financial objectives, even in the depths of recession.

Care must be taken when cutting cost. Too often companies focus on short-term cost reduction, which can result in higher costs over the long term. Costs are too often cut in areas that will be critical to future growth and success or are cut as a result of poor management information. The symptoms of cost are sometime slashed without any consideration of addressing the root cause, such as poor or inefficient business processes.

But effective procurement is not just about cutting costs, but about building sustainable competitive edge over the competition. A recession provides an opportunity to re-examine and re-negotiate existing cost and supplier contracts, but it also enables a re-examination of wider strategic goals. Even at the lowest point of any recessionary downturn organisations need to keep an eye on better times when the economy picks up. The successful organisation uses its procurement function both to ensure short term survival and to achieve longer term efficiency gains to optimise business prospects.

With that in mind, the procurement function must be party to and involved in the company’s strategic objectives and understand what’s important to the company in order to gain insight into the business drivers that enable it. To that end, the procurement function must have close ties with key stakeholders across the company in order to be able to focus on issues that are most important to the company. The procurement function needs to consider the requirements of the various stakeholders, assess them and then examine what needs to be done to satisfy them. They need access to timely, accurate information that can enable them to make decisions based on facts, not guesses.

The end result of having an effective procurement function in place will include improved procure to pay processes, resulting in increased compliance with strategic procurement contracts and reduced maverick spending, increased spend visibility and improved working capital management. Improved contract management and supplier relationship management will result in better supplier monitoring, all of which equips the organisation for long term success, and not simply short term cost cuts. Capgemini has expertise and real world experience of optimising the procurement function at organisations across a wide range of business sectors.

Our Procurement capabilties include: