Procurement Maturity Models and
Procurement Transformation
The role of procurement has changed a lot during last years and
generally in most companies procurement has become more
strategic (in many companies the strategic procurement is called
strategic sourcing, not procurement).
Still a lot to do though in many companies.
E.g. both the increasing risks in supply chains and the greater
importance of systainability call for a change in procurement and
new set of skills from procurement prosessionals.
What means Procurement Maturity Model?
Maturity models are used to represent
the different stages of development of
the procurement functions.
Procurement Transformation isn't a term with single, static definition. It
means something different to each and every organization.
The definition depends on Procurement's current state, its standing within
the organization, and its goals for future strategic growth.
For some companies, Transformation might be as simple as recognizing
Procurement's strategic potential and beginning to invest in its growth.
Four key stages in the development of the procurement function
(according to Mena)
1. Transactional procurement, little or no strategic involvement, decentralized, mainly concentrating on
ordering, chasing suppliers and reducing purchasing prices.
➢ This indicates that the organization is unaware of, or does not apply, structured activities for procurement and supply management.
2. Cost driven procurement, analytical approach, strategic intent, find savings, negotiating deals with suppliers.
➢ This indicates that the organization is aware of the models for procurement and supply management but only applies some of these
concepts in a disconnected form, without effective control of results.
3. Integrated procurement, clear strategy, manage relationships with stakeholders, integrating strategies and
processes internal with stakeholders.
➢ This indicates that the organization applies the concepts of procurement and supply management broadly but not in a
comprehensive or integrated way.
4. Leading procurement, shape strategy by creating a vision that contributes to the succees of entire supply
chain in a sustainable way
➢ Organization has adequate management of procurement and supply, resulting in the optimization of resources, maximizing results
and characterizing the institution as “state of the art”.
Source: Mena Carlos, van Hoek Remko, Christopher Martin. Leading Procurement Strategy, driving value through the supply chain. 2018. 2nd Edition. Kogan Page.
Actions to make transformation to happen, an example
Break-down of external spend by category, supplier and business unit.
Category strategies based on evaluation of current sourcing approaches versus best practice.
Prioritisation and phasing of opportunities into activities.
Savings targets, business involvement.
Plan for taking the procurement function to the next level, procurement vision.
Re-design of the procurement organization.
Skills assessment of procurement (by individuals).
Detailed execution plan.
The status of the main elements vary at different maturity stages,
some examples:
• Alignment /involvement in strategy (no strategic orientation ↔ influences organizational strategy)
• Scope of activities (order processing ↔ few areas of external spend untouched)
• Relationship management (e.g. no supplier relationships ↔ close engagements)
• Use of technology (e.g. use of speadsheets ↔ extensive use of technologies)
• Skills and knowledge of people (some training ↔ professionalized, continuous development)
• Performance measurement (KPIs) (no structured targets ↔ comprehensive balanced scorecard)
• How visible is procurement (not prominent ↔ supply chain champion)
Please note: the company can have a different stage in different areas.
Source: Mena Carlos, van Hoek Remko, Christopher Martin. Leading Procurement Strategy, driving value through the supply chain. 2018. 2nd Edition. Kogan Page.
https://get.coupa.com/rs/950-OLU-185/images/Coupa_4_Stages_of_Procurement_Maturity_eBook.pdf
Leading
procurement
organizations
have developed
an agenda to
deal with
disruptions.
They are moving
into the future
by becoming:
https://home.kpmg/uk/en/home/insights/2021/10/the-future-of-procurement.html
Value contribution curve (how to add value to the company by procurement)
Source: https://www.clearviewgroup.ie/procurement-strategy-transformation/
