„A strategy is important. Without a strategy, we live or work from day to day and probably do our best.“, says the author Oliver Kreienbrink. But the goal of our work is missing, there is a lack of motivation through the successful outcome of our actions and it is impossible to ensure that everyone in the team is working towards the same goal. Five cornerstones are needed to define a purchasing strategy: Knowledge, trends, design fields, target fields and the North Star. We would like to briefly present how we successfully develop purchasing strategies.

1. Knowing where you stand and what challenges you have to face

Every purchasing department is unique. The people who work in it, the processes that have evolved over time, the company’s requirements, the software solutions used and the supplier relationships define a purchasing department. And in order to know where you want to go, you first need to determine your own level of maturity. This usually reveals short-term optimization potential and goals for the near future. Taking stock helps many organizations to step aside for a moment and take a look at their own positioning.

2. Know and understand trends, innovations and best practice

Optimizing your own processes and structures, avoiding waste and evaluating innovative offers from suppliers are important measures for day-to-day business in a purchasing department. When developing a purchasing strategy, a broader view should be taken. Trends such as AI or blockchain, the development of networked supply chains or digitalization are important success factors for purchasing in the future and offer a lot of potential. In order to evaluate the potential applications for your own purchasing department, you need to understand and penetrate them. This is no easy task alongside day-to-day business and is unfortunately rarely prioritized. But without thinking outside the box, the right purchasing strategy can only be defined to a limited extent.

3. The five design fields for purchasing departments: People, methodology, process, digitalization and sustainability

In addition to the results of a maturity assessment and the general trends and innovations for purchasing departments, the design fields of people, methodology, processes, digitalization and sustainability must always be considered for a purchasing strategy. This involves the attractiveness of the workplace, what methodology and therefore knowledge is required in the purchasing department, how processes are changing and what impact internal and external digitalization is having on them, not forgetting the existing and new challenges in relation to sustainability. Here, it often helps to draw up a target picture for 5 years from now and to record the necessary steps towards this target picture.

4. Target areas of purchasing: costs, supply, compliance and innovation

Ultimately, every purchasing department is concerned with achieving the optimum costs for the procurement of materials and services. In addition, there is the securing of supply via compliance-safe processes and structures and the bridge to the procurement market for innovations. The individual target areas must be determined and evaluated. Key figures help to make targets tangible.

5. Determine a North Star

A purchasing strategy developed in a quiet room and stored away in a drawer is useless. Communication is one of the most important tasks in the development of a purchasing strategy. We recommend a North Star, a concise and comprehensible vision for procurement that is in line with the objectives. And this must be communicated and understood. By the employees in Purchasing, by the entire organization and by the business partners. The North Star is also suitable for quickly comparing individual measures and strategic decisions with the overall objective of a purchasing department. For example, after a negotiation, the results can be compared with the North Star with the question: Have we achieved or addressed all our purchasing strategy objectives with this supplier?