Procurement Maturity Assessment
Why Measure and Assess Procurement Maturity?
Assessing the maturity of the procurement function is an effective approach for identifying the next steps in its development. The assessment serves as a diagnostics tool, a discovery baseline, or a benchmarking exercise to pinpoint areas for improvement, and it can also be the starting point for a broader transformational journey. Regularly measuring procurement maturity helps clients track the development of their procurement function and ensures continuous improvement.
How to Conduct a Procurement Maturity Assessment?
PIR’s procurement maturity framework is structured around five key areas: Strategy, Organization, Processes, Sustainability, and Digitalization. These respective areas are further divided into defined dimensions to ensure full coverage of a procurement maturity spectrum.
Area 1. Strategy
The strategy area covers how the procurement function aligns with the overall business strategy by examining the four dimensions: Strategy & Change Management, Regulation & Compliance, Governance & Control, and Objectives & Target Setting.
Area 2. Organization
The Organization assessment focuses on how well the organization is fit-for-purpose in terms of organizational structure and size, along with securing the necessary competence and capabilities within the procurement function by examining the two dimensions: Organizational Structure and People
Area 3. Processes
The Processes area covers how the procurement function drives efficient, effective, and value-adding processes by examining the four dimensions: Category Management, Supplier Lifecycle Management, Source-to-Contract, and Procure-to-Pay.
Area 4. Sustainability
Sustainability focuses on how the procurement function defines and implements a sustainability approach that supports the company strategy and integrates sustainability principles into procurement practices by examining the dimension: Objectives & Target Setting and Capabilities & Execution
Area 5. Digitalization
The Digitalization area covers how the procurement functions work with digitalizing key processes and ensuring the availability and transparency of information by examining the two dimensions: Digital Ecosystems and Master Data & Analytics.
The procurement function’s overall maturity is assessed by assigning a maturity level between 1 to 5 for each area and respective dimensions by leveraging a combination of organizational self-assessment through questionnaires, interviews, and workshops, with industry KPI benchmarks. This ensures a shared understanding of the organization’s current and desired maturity levels, and that all relevant perspectives are included and managed.
What Are Key Considerations For a Maturity Assessment?
Through our experience from an array of projects in this field, we have identified the following factors as critical for a successful assessment and for providing valuable insights for continuous improvement.
Client engagement is crucial
Clear and active engagement from the client is crucial to get accurate and relevant insights, and contextual understanding along with ownership and buy-in to the conclusions. Clients should be genuinely curious about their maturity level and interested in understanding what other companies of similar size and industry focus on in specific dimensions.
Knowledge about what good looks like
Less mature organizations may overestimate their maturity level due to a lack of exposure to world-class procurement practices. It is essential to highlight what world-class procurement looks like in all dimensions to help clients accurately assess themselves.
Cross-functional involvement for a holistic viewpoint
Involving various departments in the assessment process ensures a holistic view of the procurement function. A cross-functional workshop can help define and agree on the current state across all dimensions and establish the preferred state. This collaborative approach ensures that all relevant perspectives are considered, leading to more accurate and actionable insights.
Tailored recommendations are needed to drive improvements
Providing tailored recommendations based on the assessment results is crucial to drive improvement. These recommendations should be specific, actionable, and aligned with the client’s strategic goals.
Improvement is not a one-time activity but an ongoing process
Emphasizing the importance of continuous improvement helps clients understand that maturity assessment is not a one-time activity but an ongoing process. Regular assessments and updates to the procurement strategy ensure that the organization remains competitive and can adapt to changing market conditions. For instance, clients can set up periodic reviews to track progress and make necessary adjustments to their procurement practices.
What Opportunities Does a Maturity Assessment Enable?
PIR’s maturity assessment framework evaluates procurement maturity across 13 dimensions, identifying growth opportunities and suggesting a transformational plan or key initiatives for the coming years. This comprehensive approach ensures that clients receive actionable insights and a clear roadmap for enhancing their procurement function, ultimately driving value and achieving strategic goals.
