How to Introduce Successful Initiative Management in Procurement (Part 1)

Currently, many companies in procurement are still focusing on the automation of their operative procurement processes using SRM software modules, such as RfX, e-Procurement, Contract-Management, etc. However, on a strategic level in procurement and initiative management, there is at least a equally great potential for utilization ...

Challenges on a strategic level

Initiative management functions as a central “grip” around all operative systems, activities, and projects in procurement. It is intended to help to depict the company goals (e.g. from a scorecard), to break them down into the performing units, and to put them into operation with clear responsibilities by means of concrete initiatives.

10 Design Criteria for Successful Initiative Management in Procurement

Through modified organizational structures in procurement, the multiplicity of operative SRM systems, their quantities of data (see the image on the right) as well as through increasing globalization and “frequency” of procurement, , it is becoming increasingly more difficultfor the strategic level (CPO, CFO, Controlling, and Category Management)to maintain an overview or transparency of the following topics:

• Who is currently working on which of the global procurement projects?
• Are the best experts working on the sourcing topics that promise the most success?
• Are the activities and initiatives following the primary aims (e.g. the scorecard)?
• What target effects (e.g. savings) can be expected in what timeframe?
• Can the set goals even be achieved with the previously launched procurement projects at the end of the year?
• … and many other topics and open questions.

The New Planning and Control Instrument for CPOs and CFOs

An initiative tool that meets these requirements is an extremely valuable planning and control instrument for the CPO and CFO for achieving a high level of transparency of the activities of the procurement organization on the strategic level and for decisively improving the reliability and forecasting of goal attainment. The following applies:

• Ensuring that the primary goals are substantiated with initiatives and underpinned with clear activities and measurable planning (e.g. for savings)
• mit klaren Aktivitäten und messbaren Planungen (z.B. für Einsparungen) unterlegt werden
• And follow clear responsibilities so that the results can be better “demanded” by management.
• Additionally, the customization of planning (forecasts) should occur in a continuous manner and the actual values should be calculated correctly, resilient, and comprehensible in order to analyze the deviations
• And capable of being projected more efficiently, precisely and quicker based on the effects of the year-end goals.
• und sich auf dieser Basis die Auswirkungen auf die Jahresendziele effizienter, präziser und schneller hochrechnen lassen.

Modern initiative management is what lacks the most

So what are the reasons and “stumbling blocks” as to why initiative management and controlling still play more of a secondary role in many companies? This question and that of proper “design criteria” will be discussed in brief in the following blog article:

The second part of this article with the 10 “lessons learned” for the establishment of initiative management is already in the works and will be published on this blog soon. Write to use if you would like us to notify you per e-mail: Contact us.

And this is your next step

If you would like to see “InitiativeTracker” mentioned based on examples here live with example data, just let us know (e.g. at This email address is being protected from spambots. You need JavaScript enabled to view it.).

We would be happy to offer you a personal online presentation on this topic or invite you to our seminars.

Procurement Performance Management 2016

We offer you a holistic solution for increased transparency, potential analyses and measuring your procurement success regarding indirect purchasing with our DataCategorizer, SpendControl and InitiativeTracker modules.

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Dr Jörg Dittrich
Managing Director Orpheus GmbH
 
"The introduction of a Spend Management system is a highly profitable step that is essential for a company’s cost position."