Elements of a Strategic Purchasing Plan

The elements of a strategic purchasing plan are the same as the elements of any strategic plan, and they are critical to successful development and implementation. These elements include a clearly identified goal which is aligned with the organization's mission; measurable objectives; strategies and tactics that are aligned with internal and external factors; and a measurement plan to ensure that results are attained.

The first step in the development of a strategic purchasing plan is to develop a clearly identified goal which is aligned with the organization's mission, vision and values. A goal is a broad statement of intended outcome. For instance, the goal could be "reduce supply expenses." The mission, vision and values come into play in terms of selecting appropriate sub-goals. If an organization's mission is to "provide the highest quality goods and services to customers," a sub-goal of significantly cutting back on the costs of the raw materials that go into the production of the product would probably not be appropriate.

Goals are supported by measurable objectives. Measurable objectives should be clear and specific enough that at the end of the plan's implementation two independent observers could agree as to whether the objective was or was not met. The acronym SMART is often used to provide guidance in the development of objectives. SMART stands for specific, measurable, actionable, realistic and timebound. Objectives support goals. For instance, the goal to reduce supply expenses might be supported by the objective "reduce XYZ supply costs by 15 percent over the next quarter."

Strategies and tactics are developed to achieve established goals and objectives. Strategies are general and indicate broadly how an organization will meet its purchasing objectives. Strategies are designed to either leverage or capitalize on strengths and opportunities, or to overcome weaknesses and threats. A strategy related to reducing supply costs might be to explore opportunities for participating in supplier consortiums. Tactics, meanwhile are operational in nature and represent action plans for specific tasks that will be done in support of the identified strategies.

Measurement plans are important elements of a strategic purchasing plan. Measurements should be designed to provide an indication, on an ongoing basis, of the progress being made toward the achievement of tactics and strategies in support of objectives and goals. To ensure that the plan is actionable and used to achieve the desired results, it is important to establish accountability for strategies and tactics, to assign measures to monitor success and to report regularly on progress. Good progress may indicate an opportunity to strengthen or increase focus on specific strategies, while not meeting goals may suggest the need for modifications.