When creating a procurement strategy, the first step is to perform an internal and external environmental scan. This aims to provide procurement management with a thorough understanding of the overall business environment and how procurement can aid in the company’s competitive strategy.
Internal Business Scanning
To ensure that the procurement strategy aligns with the company’s internal strategy, planner/buyers must assess the procurement requirements set by the business strategy and keep themselves informed about market trends.
Procurement needs to be capable of supporting several internal business strategies, including various elements such as:
1. Establishing the stage of enterprise technological development
2. The nature of corporate culture and values
3. The perception of supplier partnering
4. Outsourcing initiatives
4. Procurement’s organizational structure
External Business Scanning
After determining the purchasing department’s capacity to handle the company’s internal conditions, the subsequent task is to align the procurement approach with external requirements arising from the supply chain.
Some of the external business strategies purchasing must be able to support include such elements as:
1. Mapping international sources of supply
2. Currency and other financial issues
3. Communications technologies capabilities
4. Political and social issues
5. Government and environmental regulations