What is Strategic Procurement?

Meaning of Strategic Procurement

Strategic procurement is the process of acquiring goods and services for the business at the best possible price, at the right time. It involves measuring requirements and aligning procurement processes with the larger business objectives.

Procurement is simply identifying vendors and sourcing goods and services for business operations. When this process is optimised keeping in mind organisational goals, it can be called strategic procurement. 

Regular procurement is a short-term, less complex process, while strategic procurement is a long-term, multi-layered, complex process. The process of strategic procurement involves need analysis, vendor selection, price negotiations, sourcing and purchase, and the final payment and settlement. 

Managing this entire process manually can be very difficult; the process is cross-functional, involves a lot of paperwork, and manual data entry which can result in expensive errors and delays. With tools like RazorpayX, the entire procurement process is streamlined into one single dashboard, with features like a world-class vendor portal, automatic invoice capture and more. 

Explore RazorpayX

Goals of Strategic Procurement

The ultimate goal of strategic procurement is to optimise the entire process of procuring goods and services for business operations. Here is a breakdown of how strategic procurement aims to achieve that goal:

• Finding and selecting trustworthy vendors and suppliers who provide best-quality goods or services that fit in the budget
• Building and maintaining a good relationship with the supplier
• Minimising supply chain risk by identifying alternate vendors in case of issues
• Identifying areas of cost inefficiencies and optimising spends
• Minimise manual effort required to procure goods or services 
• Ensure goods or services are being continuously provided to the business as long as there is a need without any interruptions 

How do businesses set up procurement processes that achieve all the objectives of strategic procurement? 

The Payables Blindspot Detector is RazorpayX’s expert-curated test to help you understand how advanced is your business’s payables process. 

Take the test for free!

Process of Strategic Procurement

The process of strategic procurement is multi-fold and complex. Without tools like RazorpayX, businesses end up wasting hundreds of manhours and lakhs of rupees on manual procurement processes. 

Need analysis 

The first step in strategic procurement is an analysis of what the business needs. Collect data pertaining to department-wise spends and resources needed and create a priority-wise list of all the goods and services needed by the business for daily operations.

While analysing needs, also look into the business’s larger objectives, and what it needs to achieve it. For example, if the business’s objective is to enhance operational efficiency, it might prioritise procurement of automation tools and software that streamline workflows.

Spend analysis

The next step is to analyse department wise spends. Identify areas where departments are spending too much for too little return; or areas where spending more can result in more benefit to the business. 

This information will help when deciding which redundancies to cut down, or which departments deserve more budgets. 

Procurement workflow creation

At this stage, create a workflow for the following tasks within the procurement process: 

• Departments and cost centres to raise a request for goods or services with the procurement team
• Get the request approved by the department head, finance manager, procurement managers and other approvers

Supplier research

Once the information on needs and spends is ready, the next step is to research into the present market scenario and benchmarking prices. Identify suppliers who can provide the highest-quality products at the best prices to suit the budget. 

Set up the RFx Process

RFx refers to documents like Request for Purchase, Request for Order, Request for Quotation that can be initiated by the purchasing department. By setting up a structured RFx process, businesses can ensure transparency, evaluate suppliers objectively, and make informed procurement decisions. 

With RazorpayX, automating parts of the RFx process can save significant time and reduce errors, ensuring faster and more efficient sourcing.

Automated Strategic Procurement Process

Automated procurement processes are proven to be significantly faster, less error-prone, and more efficient. Technology has optimised spends, cost optimisations, approval workflows and more. 

By integrating technology and automation into strategic procurement, companies can enhance decision-making, minimise risks, reduce costs, and drive operational efficiency. This digital transformation positions procurement as a strategic function that adds significant value to the organisation’s goals and objectives.

The benefits of an automated procurement process are multifold. 

Better vendor experience

Automated systems calculate and disburse payments to vendors accurately and on time, ensuring no delays or missed payments. This results in a positive vendor experience and relationship.

Cost and time savings

Missed payments, incorrect transactions, wrong data entry can lead to loss of money and time spent in correcting the errors. With an automated system, these errors are eliminated, resulting in a smooth, error-free process. 

Smooth workflow

Automated procurement digitises steps like invoice capture, tax calculations, approvals, invoice and GRN matching, payment disbursal, reconciliation, etc. This results in smooth, seamless workflow with full transparency at every stage. 

Enhanced Decision-Making

Automated systems provide real-time data and analytics, giving insight into spending patterns, supplier performance, and contract compliance. Teams can make informed decisions that support cost savings, supplier negotiations, and strategic sourcing initiatives.

Automate your procurement now!

FAQs