Building an Effective Procurement Training Program: A Step-by-Step Guide for Success
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The only constant in the ever-growing business landscape is change. Procurement professionals are central in ensuring organizations secure the best quality of goods and services for the right cost under relentlessly evolving circumstances.
The complexities of procurement processes can be daunting, requiring well-trained individuals equipped with the latest knowledge and skills to navigate this dynamic field, from navigating through outdated procurement processes, supplier relationship management, and stakeholder buy-ins to maintaining the talents adept in modern procurement practices.
However, procurement knowledge and education are not widely available in academic institutions, especially Asian universities. This creates non-linear paths to procurement specialization for professionals from diverse backgrounds and education levels.
Investing in an effective procurement training program is essential to bridging the gap between procurement challenges and success, ensuring everyone is on the same page. Such a program equips professionals with valuable expertise and empowers them to drive cost savings, enhance supplier relationships, optimize workforce skills, and, ultimately, the procurement processes.
Optimization follows after standardization. This article provides a summarized walkthrough on how to build a more effective procurement training program step-by-step. Let’s get diving.
1. Assess training needs
A critical and foundational step is pinpointing the business’s procurement team's needs, assessed by thoroughly analyzing procurement job roles and responsibilities within the organization to identify specific knowledge, skills, and competencies that need gap-bridging in the training program. These may include:
- Strategic Procurement: To provide the procurement team with the tools to conduct market research, analyze industry trends, and identify opportunities for strategic sourcing, such as exploring new markets, diversifying the supply base, or identifying alternative supply sources. And ultimately, to align procurement activities to the business’s overall objectives.
- Negotiation Skills: Procurement professionals must know how to communicate to obtain the best value for the organization while maintaining strong supplier relationships. Negotiation skills training enables effective communication, persuasion, data analysis, and collaboration, leading to more favourable outcomes in supplier negotiations by finding the right balance between organizational and supplier interests.
- Supplier Management: Effective supplier management is the pivoting point in developing efficient and productive procurement lifecycles. Training in this aspect enables the overseeing and nurturing of relationships with suppliers. Building strong supplier relationships enables reduced procurement costs, improved supplier performance, and compliance with contractual terms1.
- E-Procurement and Technology: Adapting procurement processes to the increasingly digitized world is vital. Adopting e-procurement and technology enables companies to automate sourcing, requisitions, and purchase orders and improve visibility across procurement activities with real-time data and analytics, all contributing to optimized efficiency.
To narrow down for specificity, businesses can also conduct surveys, and interviews or analyze current performance and extrapolate areas of improvement from there.
Engaging with procurement professionals within the business or industry can provide additional key insights and feedback. Understand their more tailored and niche training needs, experiences, and feedback, then incorporate their feedback into the design and delivery of the training program.
2. Set Training Objectives
During this stage, involving and engaging with internal stakeholders, including procurement teams, HR, and senior management, is paramount to understanding their expectations and requirements for this training program.
Once the training needs and compiled feedback have been identified, set clear and measurable training objectives. Is it to:
- Improve negotiating skills with suppliers?
- Build proficiency in using cloud computing to streamline procurement?
- Enhance contract management to manage risks and maximize value?
- Develop cost management skills to optimize procurement spend?
These objectives should align with the organization's procurement goals and define what the participants should be able to do after completing the training program and which metrics of success will be chosen, such as less end-to-end process cycle times between procurement processes or invoice posting errors, to name a few.
3. Develop & Deliver Training Materials
Leverage resources from professional associations and organizations specializing in procurement. These organizations provide training materials, certifications, and valuable insights on best practices. Examples include the National Institute of Governmental Purchasing (NIGP) and the International Federation of Purchasing and Supply Management (IFPSM).
To cross-reference and justify the chosen training materials, tap into real-life case studies or scenarios that reflect the challenges and complexities of procurement. Incorporating these into the training program will provide participants with practical knowledge and skills to tackle real cases with solid critical thinking and decision-making, regardless of complexity.
Woolworths
Woolworths Group Limited, well-known for its chain of grocery stores in Australia, encountered supplier payment delays due to longer processing times and invoice posting errors due to manual invoice handling, lack of visibility of invoice statuses, and siloed processes for supplier engagement across the company. This was prominently due to their pre-existing legacy procurement processes managed within their SAP ERP that stemmed around manual Purchase Orders and invoices.
The company partnered with Bloom Consulting and digitized over $900 million in spending, significantly boosting productivity, including electronic collaboration for over 90% of suppliers through Bloom’s SAP Ariba solution. This also cascaded on-time supplier payments, improved governance, and visibility throughout all procurement processes.
Woolworths successfully transitioned to a more automated approach in procurement processes with mitigated change impacts throughout the organization. Today, SAP Ariba has been an anchor to the business and has been expanded to Woolworths supermarkets and New Zealand.
Cisco Systems
Cisco Systems, known for its networking and IT solutions, encountered revenue declines and fiercer competition, which signaled the need to improve its procurement process and cost savings by focusing on optimizing its supplier base, sourcing strategies, and partner collaborations.
To do so, Cisco implemented an advanced analytics platform, providing real-time insights on spending patterns and supplier performance. This enabled them to pinpoint areas requiring cost reduction and improve supplier contract negotiations.
The business also embraced a culture of innovation and encouraged two-way communication by seeking cross-functional feedback from its workforce across multiple departments. This enabled cost reduction initiatives such as implementing green procurement practices to be rolled out. These efforts saved Cisco millions annually while fostering a positive supplier relationship and optimizing procurement efficiency.
Find case studies that best reflect the procurement team’s identified needs, then determine the most effective training delivery methods for your procurement team. These can include instructor-led classroom training, e-learning modules, on-the-job training, or various methods.
4. Choose Trainers
Identify trainers or subject matter experts who will deliver the training. These individuals should have the following key fundamentals:
- Subject Matter Expertise: Trainers have a solid understanding of procurement principles, practices, and industry trends. They should have deep knowledge of procurement processes, contract management, supplier relationship management, and relevant regulations.
- Ample Procurement Experience: Trainers with practical experience in procurement roles can provide real-world insights and examples that resonate with participants. They should have a track record of success in procurement and be able to relate their experiences to the training content.
- Strong Communication Skills: They should be skilled communicators who clearly explain complex procurement concepts and engage participants throughout the training program. Trainers should be able to adapt their communication style to different learning styles and ensure that the training is accessible and understandable.
Before implementing the final training program, conduct pilot programs to test its effectiveness and gather feedback. Gather individuals to form a small group to evaluate the program's strengths and weaknesses and make necessary adjustments, including the content, delivery, and trainer, to ensure it meets the set objectives correctly.
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