6 Best Practices for Procurement Teams

Feb 10, 2023 | Best practices

Stawan photo


Feb 10, 20233 min read

Procurement best practices such as strategic sourcing, spend analysis, supplier management, automation, collaboration, and compliance can reduce costs, improve financial performance, and mitigate supplier risks for organizations. Implementing these strategies can streamline procurement processes and make informed purchasing decisions.

Best practices in procurement teams involve a combination of strategies, processes, and technologies that help organizations to effectively manage their purchasing activities. These best practices can help organizations to reduce costs, improve financial performance, and mitigate risks associated with suppliers. Some of the key best practices in procurement teams include: 

  • Strategic SourcingStrategic sourcing is the process of identifying and selecting suppliers based on factors such as cost, quality, and delivery. By conducting a thorough analysis of the market and identifying the best suppliers for specific goods and services, procurement teams can negotiate better prices and terms with suppliers, resulting in significant cost savings for the organization. Using strategic sourcing, Walmart's procurement team analyzes data on suppliers, products, and prices to identify the best options for the company. This allows them to negotiate better prices and terms with suppliers, resulting in significant cost savings for the organization. 
  • Spend Analysis: Spend analysis is the process of analyzing an organization's spending data to identify areas of opportunity for cost savings. By understanding where an organization is spending its money, procurement teams can identify areas where costs can be reduced and negotiate better prices with suppliers. The Proctor & Gamble procurement team conducts regular spend analysis to identify areas where they can reduce costs and improve efficiency. As a result, Procter & Gamble was able to reduce costs by over $10 billion. 
  • Supplier Management: Effective supplier management is critical for mitigating risks associated with suppliers and ensuring that an organization's operations are not disrupted by supplier-related issues. This includes assessing the financial stability of suppliers, their ability to deliver goods and services on time, and the quality of their products or services. Dell's procurement team closely manages its suppliers, regularly assessing their performance and identifying areas for improvement. This has helped Dell to mitigate risks associated with suppliers and improve its overall financial performance. 
  • Automation: Automating procurement processes can help organizations to streamline their purchasing activities and reduce the time and resources required to purchase goods and services. By implementing automated systems and processes, procurement teams can improve efficiency and reduce costs. GE has implemented an automated procurement system that allows them to quickly and easily purchase goods and services. This has helped GE to reduce costs and improve efficiency. 
  • Collaboration: Collaboration between different departments and functions within an organization can help to improve the overall procurement process. By working together, different departments can share information and insights, resulting in better decision-making and improved performance. Cisco's procurement team works closely with other departments within the company, such as engineering and marketing, to gather insights and make informed purchasing decisions. 
  • Compliance: Compliance with legal and regulatory requirements is crucial for procurement teams. This includes compliance with laws and regulations related to procurement, such as procurement standards, anti-corruption laws, and data privacy laws. Microsoft has implemented a robust compliance program to ensure that its procurement activities comply with all relevant laws and regulations. 

In conclusion, best practices in procurement teams include implementing strategic sourcing, spend analysis, effective supplier management, automation, collaboration, and compliance. By implementing these best practices, organizations can reduce costs, improve financial performance, and mitigate risks associated with suppliers. 

FactWise is an end-to-end procurement SaaS solution for a global client base of small and mid-sized product manufacturing companies. Our Source-to-Pay product has been built keeping in mind best practices for procurement teams. It enables cost reduction and strategic sourcing via holistic analytics, improves supplier management and supplier diversity, increases governance and transparency to leaders, streamlines and automates processes for teams to collaborate more effectively and efficiently, and increases payment compliance. A full, integrated suite of procurement products offered at a fraction of the cost of its competitors, FactWise is dedicated to generating win-win outcomes for buyers and suppliers globally.  

About the Author

Stawan is the founder and CEO of FactWise. Before founding FactWise, Stawan was the NA TMT-Procurement Leader at McKinsey. Passionate about procurement, Stawan has 15 years’ experience in enabling clients of all sizes to achieve business impact via procurement.


Show all

No comments to show

Suggested Articles



Privacy Policy

Terms & Conditions

©Copyright 2024. FactWise. All Rights Reserved.