{"id":1103,"date":"2020-08-31T14:53:59","date_gmt":"2020-08-31T14:53:59","guid":{"rendered":"https:\/\/www.certitrek.com\/nlpa\/?p=1103"},"modified":"2023-11-30T11:09:24","modified_gmt":"2023-11-30T15:09:24","slug":"plan-buy-new-normal","status":"publish","type":"post","link":"https:\/\/www.certitrek.com\/nlpa\/blog\/plan-buy-new-normal\/","title":{"rendered":"How Do You Plan to Buy in the New Normal?"},"content":{"rendered":"

Supply Chain Disruptions, Global Pandemic, Mass Layoffs, Economic Downturn, and a New Normal perspective for\u00a0Supply Chain Operations<\/a>. An Annual Procurement Plan is critical to efficiently and effectively manage and conducts the essential elements of today\u2019s Procurement Mandates. In this article, we will outline the Framework for a Top-Class Annual Procurement Plan. In later segments of this work, we will go into more detail concerning the individual components of the plan.<\/p>\n

It is a best practice to form a Category or Commodity Team, led by procurement leadership to formulate and execute an Annual Procurement Plan. A Category or Commodity Team is most effective when formed from representatives from key stakeholder groups such as customers, sales, marketing, engineering, finance, and logistics.<\/p>\n

Today\u2019s executives are increasingly asking their procurement functions to provide detail and how they plan to realize cost reduction and bottom-line impact. The absence of a well-constructed annual procurement plan will disable procurement professionals from answering this question confidently, accurately, or at all. \u00a0The inability to answer this question is not a viable option for a purchasing professional who wants to maintain job security. Certainly \u201cwinging it\u201d will be frowned upon, to say the least.<\/p>\n

An Annual \u00a0Procurement Plan can serve as proof that these executives require. A Procurement Plan is a structured document that illustrates a well-thought-out approach to optimally procure various groups of products and services. This plan should be integrated into and driven by an organization\u2019s Corporate Strategy.<\/p>\n

A comprehensive procurement plan includes these sections:<\/strong><\/p>\n

Forecast:<\/strong>\u00a0A projection of the demand for each of the various groups of products and services (referred to as \u201ccommodities\u201d). In a manufacturing environment, a sales forecast can be the basis of your buying plan forecast<\/p>\n

Market Analysis:<\/strong>\u00a0An assessment of the market for each commodity. The market analysis section of the buying plan is generally designed to determine whether supply is growing, declining, or stagnant and whether demand is growing, declining, or stagnant. These determinations can be made by addressing characteristics of the market in terms of number of major suppliers, new developments, availability of materials, suppliers\u2019 financial conditions<\/p>\n

Approach:<\/strong>\u00a0The process to procure each commodity. The Approach section of a Procurement Plan is an instruction on how to procure these commodities.<\/p>\n

The following is a process for procuring commodities:<\/p>\n

(1) Develop a new contract<\/p>\n

(2) Develop a new blanket order<\/p>\n

(3) Utilize an existing contract<\/p>\n

(4) Utilize an existing blanket order<\/p>\n

(5) Utilize existing, non-contractual supplier relationships<\/p>\n

(6) Buy in a hand-to-mouth fashion from the supplier deemed most appropriate at the time of purchase.<\/p>\n

Resources:<\/strong> The Resources section of the buying plan specifies the people and other resources needed to manage the purchase of the commodity. You will indicate the names of each person responsible for the commodity, including end-users and representatives from other departments<\/p>\n

Historical Spending:<\/strong>\u00a0The historical spending section of the procurement plan indicates the amount spent on the commodity. It should be based on a list of each commodity and the amount of money spent on such commodities in the past year. This list is commonly called a \u201cSpend Profile.\u201d<\/p>\n

Techniques:<\/strong>\u00a0The techniques to be used to reduce costs for each commodity.<\/p>\n

These techniques can include, but are not limited to, the following:<\/p>\n