Designing Your Procurement Organization Structure

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There are multiple ways in which you can design your procurement organization.In this recent article, Filip Paenhuysen of Capgemini presents the different operations models for Procurement and their pros and cons.

There are essentially two different organizational models

  1. Matrix

  2. Process

So let’s look at these two models

 

  1. Matrix: This organizational model is more focussed on aligning the organization with different departments within your organization. For example, Marketing & Sales.Production department etc. Though, this kind of model results in Procurement more closely aligned with the individual departments but certainly has its pitfalls too.

    1. Pros:

      1. Communication is much simpler with the stakeholders.

      2. Better overall satisfaction with procurement departments

    2. Cons:

      1. Having category managers aligned with the different departments, leads to specialization of individuals in the given category and hence could lead to less productivity if the sourcing workload in that group is not consistent.

      2. Heavy demands placed on the competencies of employees

  2. Process: This organization model is structured about the Procurement process, The focus is more on optimizing the entire process rather than aligning individual category managers with different departments. So each Sourcing event is treated as input to the process and the same process is used across categories.

    1. Pros:

      1. Better work allocation within the team, and hence higher productivity.

      2. Uniform responsibility over the entire core processes.

    2. Cons:

      1. More time spent on work allocation

      2. Could lead to lower stakeholder satisfaction

 

Both models have their pros and cons, but the Procurement Organization model needs to be designed based on the organization needs and as well as your spend profile. Probably, you need a hybrid model, where the matrix model is applicable for high spend categories and a process model for everything else.

 

You can read more about this article by following the link below.

 

Go to the link


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