Procurement Maturity Model (PowerPoint PPT Slide Deck)

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This product (Procurement Maturity Model) is a 22-slide PPT PowerPoint presentation slide deck (PPT), which you can download immediately upon purchase.

The Procurement function has advanced tremendously since 1980s. Starting with fulfilling a simple "buyer" function in the 1980s, to now playing a strategic role in prominent organizations. Procurement has come a long way over time and continues to grow increasingly sophisticated.

This PowerPoint presentation discusses a 3-phase Procurement Maturity Model, capturing how the Procurement function evolves from a transactional, centralized function, focused on Cost Reduction, to a strategic function, embedded within the business units, and a driver to Competitive Advantage. Each developmental procurement stage is marked by specific characteristics and milestones.

The 3 developmental phases of the Procurement Maturity Model are:

1. Inception – The first developmental phase is typically symbolized by centralization and a low level of trust in the Procurement system.

2. Development – At the Development stage, senior management (CEO, CFO and CPO) understands the importance and the need for change, and endorse the way forward, for Procurement to evolve into a strategic function

3. Agility – By this stage, Procurement & Sourcing resources and processes are integrated into the business so that they lie close to the pulse of the organization. Procurement best practices are truly embedded in the organization’s culture and business functions, in the form of a continuous cycle.

These sourcing maturity stages are discussed in depth within this framework presentation. By understanding the nuances of this Procurement Maturity Model, we can conduct a Procurement Maturity Assessment. Furthermore, this 3-phase approach can be leveraged as a Procurement Transformation framework, as the series of transformations from one stage to the next significantly increase the ROI of the Procurement & Sourcing function.

Additional topics discussed in this Sourcing Maturity Model presentation include the "Push" model, "Pull" model, "Embedded" model, among others.

This deck also includes slide templates depicting the 3-phase Procurement Maturity Model, Procurement Maturity Model Curve, Push Model, Pull Model, and Embedded Model for you to use in your own business presentations.

This presentation delves into the "Push," "Pull," and "Embedded" models, providing a comprehensive understanding of each. It also includes templates for the Procurement Maturity Model, aiding in the creation of your own business presentations.

Source: Best Practices in Maturity Model, Procurement PowerPoint Slides: Procurement Maturity Model PowerPoint (PPT) Presentation Slide Deck, LearnPPT Consulting

PPT SLIDE DEEP DIVES

Aligning Objectives in Procurement's Development Stage

This PPT slide outlines the "Development" stage of the Procurement Maturity Model, emphasizing the importance of shared objectives between business stakeholders and the Procurement function. This phase is marked by enhanced cross-functional collaboration and a "Pull" mindset, which aims to foster synergy in achieving savings targets.

At the center of the diagram is Senior Management, which plays a pivotal role in aligning objectives across various stakeholders. The structure indicates that both the Country/Business Unit (BU) Director and the Procurement Director are responsible for driving savings targets. This alignment is crucial for ensuring that all parties are working towards common goals, thereby facilitating a more integrated approach to procurement strategies.

The slide also highlights the roles of Prescribers/Users and Buyers, illustrating how their involvement is essential in executing the "Pull" strategy and initiatives. This indicates a shift from a more transactional approach to one that encourages collaboration and mutual support among different functions within the organization.

The transition to this "Pull" model is characterized by aligned objectives and teamwork, albeit on a project basis. This suggests that while the collaboration is significant, it may still be limited to specific initiatives rather than being a fully integrated operational model.

Overall, the slide serves as a guide for organizations looking to enhance their procurement maturity by fostering cooperation and shared accountability among stakeholders. It underscores the necessity of strategic alignment in achieving operational efficiencies and cost savings.

Understanding the Inception Phase of Procurement Maturity

This PPT slide presents an overview of the first maturity stage of the Procurement function, termed the "Inception" or "Push" model. This phase is characterized by a top-down approach where senior management sets performance goals and savings targets for the Procurement department. The structure illustrates the flow of directives from senior management to various stakeholders, including the Procurement Director, Country/BU Director, and ultimately to Buyers and Prescribers/Users.

In this model, the Procurement function is primarily reactive, as it must push initiatives and strategies onto the business units. This unidirectional flow indicates a lack of collaboration and trust in the Procurement system, which is a common challenge during this stage. The diagram emphasizes that the savings targets are mandated by senior management, suggesting that the Procurement team has limited autonomy in shaping its objectives or strategies.

The text also notes that during the Inception phase, trust in the Procurement system is low. This lack of trust can hinder the effectiveness of the initiatives being pushed, as stakeholders may resist or be skeptical of the directives from senior management. The overall implication is that while this phase is essential for establishing initial performance goals, it may not foster a sustainable or engaged procurement culture.

For organizations considering this model, it's crucial to recognize the limitations of a purely push-driven approach. Transitioning to a more collaborative model may enhance trust and engagement among stakeholders, ultimately leading to better outcomes in procurement performance. Understanding these dynamics can inform strategic decisions as organizations evolve their procurement functions.

Transforming Procurement: The Agility Stage Explained

This PPT slide outlines the third maturity stage of the Procurement Maturity Model, termed the "Agility" or "Embedded" model. At this stage, procurement functions are fully integrated into the overall business framework, allowing them to operate closely with other organizational components. The text emphasizes that procurement resources and processes are not merely transactional, but are woven into the fabric of the organization's culture and business practices. This integration is depicted as a continuous cycle, highlighting the importance of ongoing improvement.

Key elements include the roles of senior management, country/business unit directors, and procurement directors, all of whom are essential in driving ambition and strategic alignment. The slide illustrates a structured approach where ambition flows from senior management down to directors, creating a funnel effect that ensures alignment with organizational goals. Continuous improvement plans are central to this model, indicating that procurement is not static, but evolves through regular assessments and enhancements.

The diagram suggests a virtuous cycle where prescribers, users, and buyers interact, reinforcing the idea that procurement is a collaborative effort. This collaboration is crucial for leveraging significant savings and achieving shared ambitions across the organization. The slide implies that organizations at this stage can expect sustainable value creation through their procurement processes, making it a critical phase for companies looking to enhance their operational efficiency and strategic decision-making capabilities.

Understanding the Inception Stage of Procurement Maturity

This PPT slide outlines the first maturity stage of the Procurement function, labeled "Inception." This phase is characterized by centralization and a notable lack of trust within the Procurement system. Key points include a general lack of appreciation for the performance generated by the Procurement function. It highlights that only a small fraction, specifically 20%, of the savings achieved is actually reflected in budgets, indicating a disconnect between procurement activities and financial recognition. Furthermore, it notes that performance metrics are loosely tracked, suggesting a lack of rigorous oversight and accountability.

The slide also addresses inherent shortcomings of this model. It emphasizes that the transactional nature of Procurement limits its role to downstream activities, which can hinder its effectiveness. The isolation of Procurement from core business functions is particularly concerning, as it restricts the ability to leverage insights related to needs and consumption. Consequently, Procurement's focus becomes narrowly defined, primarily revolving around negotiating margins with suppliers rather than contributing to broader strategic objectives.

To address these issues, the slide suggests that transformation is necessary. It proposes that Procurement should broaden its scope in 2 key directions: upward to engage leadership and sideways to foster cross-functional collaboration. This shift is essential for enhancing the overall effectiveness and strategic value of the Procurement function, moving beyond mere transactional tasks to a more integrated role within the organization.