Procurement Reframed™

The Cirtuo 15 guiding principles and rules of strategic procurement

What is Procurement Reframed?

Procurement Reframed™ are guidelines developed by Cirtuo through decades of experience in the digital transformation of procurement. The Cirtuo 15 guiding principles and rules of strategic procurement were identified through conducting +100,000 hours of research and development workshops. The principles were applied in developing Cirtuo Guided Strategy Creation™ procurement software. Cirtuo’s solutions are relied on today by Fortune 500 companies and SMEs to transform their procurement capabilities. The guides have helped Cirtuo’s clients to accelerate the development, validation, and execution of category and supplier strategies. The Procurement Reframed philosophy has roots in our history as expert management consultants in the procurement industry. As such, the knowledge, passion, and expertise were applied in developing Cirtuo category management software –  delivering a solution that was a pioneer in the automation of category strategy creation. 

What are the benefits of Cirtuo Guided Strategy Creation™?

Over the past 15 years, the timing was not suitable for significant procurement development. From 2010 to 2020, the world experienced its most extended period of economic growth. Cost reductions and supporting growth by all means necessary was a key focus for organizations with a procurement function during this period. Procurement was reduced to sourcing activities and RFx / negotiations to achieve cost reduction targets. The strategic element of procurement was considered “nice to have” but not essential, and its importance into the broader organization was not fully realized. Procurement strengthened the image of being purely tactical. COVID-19 caused a massive shift in supply chain balance, and now geopolitical conflicts require procurement to act as a firefighter for organizations in survival mode. As a result, the need to ensure business continuity is considered a top priority in times of immense disruptions, and cost reductions have become less critical.

The procurement evolution – that seat at the table – is now feasible and realized. Today, the scarcity of materials required to grow economies and maintain business viability – has highlighted procurement’s importance within the organizational framework. There is pressure in all areas of procurement for the function to move up the value chain curve. Procurement professionals tasked with searching for scarce goods and services now require a robust dialogue with stakeholders and a correction in redefining an organization’s final offering to avoid supply chain problems. A procurement framework that excludes considering the supply side can become expensive, so stakeholders will become more open to being approached by procurement to adopt new solutions. If we do not understand how to change by ourselves, then market dynamics will change procurement for the better, or it will lose its importance within organizations. It is a prime moment for many CPOs and PLTs to step up and retain a permanent seat at the table.

Strategic

Business requirements
Spend and market intelligence
Analysis and strategy

Tactical

Risk management
Initiatives management
Results and reporting

Operational

Request to pay automation
Contract management automation
Compliance management

Transformation | Drive value

Focus on strategic tasks: automate the rest

Cirtuo enables the strategic transformation of procurement

procurement reframed category strategy

Procurement transformation is both – digital and strategic. We currently observe digitalization focused on operational-tactical activities – SRM, contract management, procure-to-pay, procure-to-source, etc. But these solutions are just creating infrastructure to become more strategic. Then the value is created upfront in the value chain process and is simplified by starting procurement where suppliers are already pre-selected or pre-determined by the specification, you have already lost that battle. There is nothing much to win. The Procurement Reframed concept defines 15 simple, proven rules for ensuring your organization becomes genuinely strategic. So your transformation needs to be strategic as well.

Strategic and tactical activities in focus

Strategy and Alignment

1

Rule of Alignment

Procurement strategies are aligned with business strategies to support the fulfillment of the company's objective

2

Rule of Equality

Category, supplier and overall procurement strategies equally focus on value, costs and risks

3

Rule of Insight

Procurement strategies address current and future business requirements, as well as internal and external challenges

4

Rule of Agility

Procurement strategies are continuously adapted to changes

5

Rule of Aspiration

C-Level and end customers are the genuine stakeholders

Responsibility and Relationships

6

Rule of Responsibility

Procurement professionals are accountable for strategy creation, validation, and implementation

7

Rule of Relationships

Procurement professionals are responsible for relationships with stakeholders and suppliers for mutual benefit

8

Rule of Knowledge

Procurement professionals are responsible for enriching and disseminating knowledge to peers and stakeholders gained through practical experience and education

9

Rule of Sustainability

Procurement enables all relevant sustainability

10

Rule of Ethics

Follow best ethical principles in procurement

Operating model and Organization

11

Rule of Design

The Procurement operating model and organization are designed to support the implementation of procurement strategies at all levels

12

Rule of Automation

Automate all operational and tactical activities to the maximum possible extent

13

Rule of Relevance

KPIs need to support the realization of each individual strategy; one-size-fits-all KPIs are of secondary importance

14

Rule of Integration

Strategic, tactical and operational activities and systems need to be integrated at all levels

15

Rule of Change

Procurement transformation is an ongoing process of continuously adapt the operating model and organization to actual strategies

What are the practical implications of the Procurement Reframed concept?

Many organizations have told us these rules are known to them and that they are nothing new. However, a significant gap becomes visible when we start a dialogue about how they understand and apply the rules. The conversation typically begins with vague definitions of strategic, tactical, and operational (transactional) Procurement. The dialogue continues with a lack of strategic skills, lack of focus, and at times, leadership. Often consultants are asked to transform Procurement and deliver short-term results.

 

A survey tool will soon become available to help determine the development requirements to transform your procurement function. Cirtuo will also make it possible for you to conduct a self-assessment to begin planning an approach to developing an organizational procurement strategy. The Procurement Reframed concept is designed to assist with the explanation of how Cirtuo Guided Strategy Creation™ technology enables strategic Procurement. Cirtuo will integrate all the rules of category, supplier, risk management, and sustainability requirements to help procurement organizations become truly strategic.

Procurement strategy

Global procurement strategy on the CPO / procurement management level. The strategy captures the needs and wants of different business units. The system helps CPOs prioritize and integrate those into the procurement strategy.

Transformation strategy

Continuous procurement organizational alignment / Transformation to enable execution of overarching procurement strategy.

Category strategy

Comprehensive category approach of analyzing business requirements and challenges to create value, reduce/avoid / costs and mitigate critical category risks.

Organizational
adjustments

Supplier strategies

The individual supplier approach strengthens the relationship, ensures product availability, meets requirements (price, sustainability, diversity, etc.), and supports innovation. 

Risk management

An integrated approach to mitigate/avoid critical risks on all strategy levels.

Sustainability

A sustainable approach to procurement is more critical than ever and should be integrated into all strategic approaches.

Diversity

Procurement is a gluing factor to secure value creation, and this can only be done through a responsible procurement management approach towards the key success ingredient - people. 

Strategic
procurement
technology
that delivers

Cirtuo Procurement Software logo
AI-powered software that automates category strategy creation. Introducing the solution for faster decision-making, leading to greater business impact and value delivery.