The procurement maturity model helps you in understanding where your company stands and how to optimize business processes while giving procurement professionals a clear view of how to add the best value to the company. 

The procurement maturity model starts with traditional procurement but ends with a best-in-class procurement process. Here is how the stages of the model help in achieving procurement strategy and procurement maturity:

1. Tactical and operational procurement- Companies are focused on cutting costs, and securing goods and services at the lowest price as they lack in strategy.

Staff source and purchase their goods. The finance department is burdened with trying to keep purchases within the limit, with no procurement team in place at this stage, as they don’t have any sourcing, contract lifecycle management, or procure-to-pay technology in place. They depend on ERP for expense accounts.

2. Strategic sourcing procurement - Companies at this level of procurement maturity generate substantial value from the purchase of goods and services. They employ procurement professionals to develop and implement policies to support purchases, contract management, and negotiation. The procure-to-pay and finance team approaches supply chain management with an eye toward both saving and value by building sourcing mastery.

At this stage, the importance of collaborating with finance teams to streamline sourcing events and manage multiple events becomes quite clear. By setting benchmarks and KPIs for analyzing vendor performance and compliance through the use of artificial intelligence, centralized data management companies gain full control and visibility over their spending. 

3. Strategic category management procurement-

Companies are ready to add additional value as they want to expand their capabilities by focusing on strategic capabilities. But at this stage, the value provided by the category manager can be limited. Limited technology can hinder the number of events and the scenario that can be customized to achieve the best results. One should consider strategic sourcing to help category managers in adding value to the company. At this stage, procurement organizations have advanced supplier management capabilities and advanced sourcing capabilities, which allow one for multi-factor award scenarios and expressive bidding by using RPF management.

4. Business innovation- The procurement process at this stage has fully aligned procure-to-pay goals with the company. Business innovation as procure to pay and sourcing leaders are working closely now as partners within the organization and have gained maximum value from each category.

Category management and supplier relationship management are helping the company to enable them to seize opportunities, develop new products, and in negotiating optimal terms

Business innovation at this stage, all spending flows through one BSM management with an invoice management solution, as this is how a Best-in-class organization works.

Conclusion-

Moving to the higher stages optimizes the way a company spends and manages effectively.

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