Top 20 - Procurement Organization Best Practices

Feature blog post by Mike Cargiulo, President & CEO of MJC Sourcing, LLC

1. Move fast, segment spend, address large spend opportunities 1st
   
2. Develop and track annual savings goals by spend category
   
3. Competition more important than size of deal - for leverage and best deal
   
4. Standard “Sourcing Process” understood by all with team-based supplier selection decisions
   (procurement led, finance, legal and business areas on team for large strategic spend)
   
5. Need data and systems to know where, how much, and with who you are spending
   
6. Procurement organization staffing should be adequate to address all spend, target ROI 50-1
   
7. Reverse auctions for all “commodity” spend categories, try to commoditize as much as possible
   
8. Be confident suppliers are not charging you 20% more than your competitors
   
9. Have supplier contract exit strategies wherever possible for leverage and optimal service
   
10. You have the money, you always have the leverage, always push for more
    
11. Suppliers must earn a fair profit
    
12. Local, regional, and global sourcing strategies must be considered
    
13. Never commit longer than 3 years, unless supplier has no real competitors in the market
    
14. Reevaluate large and critical spend categories every 2-3 years, new products always emerge
    
15. Hire top talent and provide ongoing training
    
16. Supplier relationships and who owns it are not as important as their ability to deliver
    
17. Never commit to purchase volumes if possible, forecasts work best
    
18. Procurement organizations are like Switzerland - always neutral for best deal for the company
    
19. Watch for supplier divide and conquer tactics, everyone at the company is on the same side
    
20. Electronic RFPs when available, paper RFPs/binder responses waste time and money