Framework for Identifying Procurement Savings Opportunities PPT
This PPT slide, part of the 15-slide Strategic Sourcing Framework PowerPoint presentation, outlines 4 distinct categories of savings opportunities within procurement, categorized by business impact and supplier situation. The categories are Leverage, Strategic, Routine, and Bottleneck. Each category reflects a unique combination of expenditure levels, supplier availability, and complexity of specifications.
In the Leverage quadrant, the focus is on high-expenditure areas with many available products and services. This situation allows for competitive sourcing due to the abundance of qualified suppliers, making it easier to negotiate favorable terms. The implication here is that organizations should prioritize these areas for maximum savings potential.
The Strategic quadrant highlights scenarios that are critical to profitability and operations. Here, there are fewer qualified suppliers and larger expenditures, which necessitates a careful approach to sourcing. The complexity of specifications in this category indicates that organizations must invest time and resources to ensure quality and compliance, as mistakes can have significant repercussions.
Routine opportunities represent low-value transactions with many available products and suppliers. These items are often purchased by anyone within the organization, suggesting a more decentralized purchasing approach. The focus here should be on streamlining processes to reduce administrative burdens rather than seeking significant savings.
The Bottleneck category presents the most challenging scenarios, characterized by complex specifications and limited supplier options. This situation can severely impact ongoing operations and maintenance. Organizations must be cautious and consider new technologies or untested processes, as these could introduce risks that need to be managed effectively.
Understanding these categories allows organizations to tailor their procurement strategies to maximize savings while mitigating risks associated with supplier relationships and product specifications.
This slide is part of the Strategic Sourcing Framework PowerPoint presentation.
This presentation is created by former McKinsey, BCG, Deloitte, EY, and Capgemini consultants. It explains the approach to Strategic Sourcing / Procurement Strategy utilized by global strategy consulting firms.
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