July 25, 2019

The Value that Procurement Centres of Excellence Bring to Organisations

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Spend Matters defines a Procurement Centre of Excellence as “an internal entity that performs internally facing knowledge-based services on a one-to-many basis to procurement (and to broader stakeholders) in order to drive scale, repeatability, and best practice.”

Gartner, meanwhile, offers this Procurement Centre of Excellence definition, describing it as “a permanent, primarily full-time team of experts focused on attaining and sustaining world-class performance and value”.

Taking these definitions into account, the value of having a Procurement Centre of Excellence structure within your organisation is clear.

What does the CoE central management team do?

A Procurement Centre of Excellence is a means of establishing a central management team that is responsible for managing the sourcing of goods and services on a global level.

Centres of Excellence will typically play quite a holistic role within the organisation, taking on responsibilities such as advising on the implementation and use of new technology, undertaking research, providing training to employees and, according to Cleverism, providing “a focal point for knowledge management”. While that might all sound a bit vague, broadly-speaking it simply means that the purpose of a CoE is to improve overall expertise in certain areas of an organisation and use its resources in the most effective manner in order to help it improve.

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Thanks to its position within your organisation, this management team is able to oversee expenditure across different supply chain functions and support procurement-related activities across the business.

The Centre of Procurement Excellence will also draw on the expertise of cross-functional teams that can provide insights into areas such as compliance, risk and services.

For example, this could include getting an insight into what goods and services should cost and when they will be delivered, in order to ensure that projects are delivered on time and on budget and provide the best value to your organisation.

Procurement Centres of Excellence promote greater collaboration

The reason why many organisations have either established (or are looking to establish) Centres of Procurement Excellence is because they aim to promote greater collaboration and also promote the use of best practices that will ultimately produce better results.

This can include the introduction of new procurement methodologies, overseeing training and skill assessments, encouraging shared learning and the sharing of information, and working towards building a team that has common procurement goals that are supported by cross-functional insights.

One of the advantages of putting a Procurement Centre of Excellence in place is that it can help to support the creation of flexible supply chain processes that can be tailored at a local level, where requirements may differ from one region to the next (e.g. regarding regulations and laws).

Things to consider when building a Procurement Centre of Excellence

When it comes to planning out and building a Procurement Centre of Excellence, there are steps you should take in the project’s early stages to improve your chances of success.

You need to have a clear idea of what your goals are and how the sourcing centre of excellence is intended to add value to the wider organisation.

You also need to take into account the ability to scale-up its operations over time, how this can be achieved (e.g. through the use of tools such as automation) and how you plan to report on its results to key stakeholders.

As William Atkinson states in this piece for SupplyChain247, “procurement excellence means aligning procurement strategies and programs with the overall objectives of the organization, helping everyone to align with those objectives, and managing the risks that are inherent in the procurement processes.”

Given the Centre of Excellence’s role and position within an organisation, it really is essential that straightforward communication and collaboration between the central management team and other areas of the business is always taken into account when establishing a Procurement CoE.

If you found this information useful then take a moment to check out our resources section here, which contains detailed white papers and reports covering different aspects of procurement and supplier information management ->

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