Webinar Notes: Procurement Operating Models

This week’s featured webinar was hosted by Sourcing Interests Group and presented by KPMG with a case study from Greif, Inc. on Procurement Operating Models.

Each company and procurement organization has unique needs when it comes to division of responsibilities, approval and communication patterns, and geographical business units. Putting the right operating model in place requires a solid understanding of those needs and making sure they are reflected in spend management activities, interactions with stakeholders and opportunities for value creation.

Many companies have grown through acquisition or are made up of loosely connected business or operating units. Procurement must find a way to provide services to and maximize value creation for all of their internal customer groups at the same time.

When you look at procurement as an organization, centralized or center-led groups tend to have the best results in terms of both savings and spend under management. But it may not always be optimal to have the same model across all categories of spend, opening the door to hybrid models developed specifically to take advantage of the best opportunity in each category while still providing consistency.

Determining the right model for managing each category requires an understanding of organizational requirements (are your specifications/designs standardized or specialized) and the supply market (are you working with suppliers that are localized or national/global). There is no single best answer – either at the organizational or category level.

There are also talent management implications, allowing some categories to be managed by experienced but general process owners and others to be led by category experts. Some categories are also better targets for outsourcing, which also changes the way they are managed and owned internally.