By OMX | November 15, 2019

In recent findings, Standard Bank notes that companies are spending more of their revenue on products and services than they were thirty years ago. Looking back over the years, it’s evident that the needs of both corporations and consumers have shifted with the likes of globalization and a complex business market at the fore. It’s for this reason that efficient procurement standards are more valuable to a company’s success than ever before. With a well-managed procurement process, it can contribute to an efficient and cost-effective business operation that ultimately results in a competitive edge within the market.

Alternatively, when procurement and supply aren’t adequately managed, problems can easily arise thus resulting in a disruption of the flow of goods and services. Enter the Chartered Institute of Procurement and Supply, or what’s commonly known as CIPS. With the growing need for efficient procurement initiatives, CIPS released a guide to the Global Standards of Procurement and Supply. In this article, we will unpack these standards and dive into how businesses can start gaining insight into the best practices for a profitable supply chain.

Procurement Standards Calculation

About the Global Supply and Procurement Standards

In 2014, CIPS released its yardstick for individuals and organizations to measure their procurement knowledge and capabilities. By measuring the level of competency within the procurement initiative, organizations can start crafting a strategy that either alleviates points of error or upskills staff where needed. This results in a more effective and efficient supply chain that ultimately contributes to a stronger and smoother business operation.

The Standard was designed to be relevant within all sectors and industries. Through extensive research, and with over 3000 practitioners and academics, it establishes a procurement and supply strategy that works well at all levels and across all sectors. This means that they can also be used to asses larger corporations, SMEs, and individuals who are looking to improve on their career path.

So, how does the Global Supply and Procurement Standards work? At each stage of the procurement initiative, CIPS has established an appropriate set of expectations and aims for organizations to drill down on. As Next Tenders puts it, The Standards help department heads understand “what good looks like” in procurement and supply chains. Any gaps in personnel can then be highlighted in order to uphold a business’s effectiveness while identifying the demand for upskilling where needed.

The benefits of using CIPS’ Global Standards are:

  • Enhanced organization performance through detailed analyses, identifying gaps in the chain, and enabling a better procurement team.
  • Increase personal performance to help excel an individual to the next stage of their career.
  • Invaluable guidance in employee performance reviews, employment processes, and ethical supply chain practices.
Procurement standards review

What are the Global Standards?

CIPS structures its methodology into 5 key competency levels. According to the institution, these levels are a representation of the core skills and tasks that an individual should be capable of at each stage of their profession. These 5 levels are:

  • Tactical: applying key tasks that are associated with the work of procurement and supply.
  • Operational: providing advice and guidance on the performance of organizational procedures and processes in connection with procurement and supply.
  • Managerial: Developing, improving, and fulfilling the organizational and functional objectives in procurement and supply.
  • Professional: Formulating appropriate and strategic direction and advice on the influences on both internal and external stakeholders in procurement and supply.
  • Advanced Professional: Guiding procurement teams and influencing the board to adopt leading-edge procurement strategies that best support procurement and supply. It is also noted that individuals in this position should influence supply markets with innovative sourcing solutions too.

From there, these levels are then broken into 4 pillars and follow 11 themes for effective initiatives. The reason for this is to divide the individual segments to identify key knowledge and capability indicators.

The Four Pillars and Their Themes

  • Infrastructure: position and influence, external environment, technology
  • Process: speed management, contracting, sourcing
  • Performance: delivering outcomes, metrics and measurements
  • People Development: developing individuals and teams, developing self and personal skills, ethics in procurement and supply.

Using The Standard can be helpful in determining the performance level of any individual throughout the supply chain. By identifying these skillsets, an organization can, therefore, assess how efficient and effective their procurement strategy is while still maintaining a notable level of ethical operations.

Following on CIPS’ mantra of “thinking globally, operating locally”, it’s important to consider local procurement operations too. Droit-Afrique outlines an effective plan for organizations that can be used in conjunction with global procurement standards to help build a well-adjusted strategy.

Procurement standards strategy meeting

The Bottom Line

The benefit of utilizing the Global Standards for Procurement and Supply is clear: they help companies optimize their effectiveness in obtaining a productive work environment. To put it simply, more upskilled staff result in better profit margins, ethical trading practices, as well as a successful business model to ensure an upward trend of success.

 

OMX

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