What are they main pillars of an effective and sustainable procurement department? How does one set up a purchasing organization?

These are very basic questions, but their in-depth analysis is very complex and multi-layered, and discussed by a host of books, coaching seminars and experts.

For those who don’t have time to go through all the literature, it may help to take a step back and approach these points by answering a few simple questions:

1) What are the internal and external stakeholder of a procurement department?

Internal:
• Purchasing department per se including its global offices
• Engineering and design department
• Supply chain / logistic department
• Quality department
• Production plant
• Sales department
• Board of directors

External:
• Suppliers
• Customers
• Legal Framework

2) What are the tasks of a purchasing department?

• Providing the best source for required goods
• Providing different types of information to stakeholders

This is only the first step to answer the initial question. Eventually, you will need to set up a method to evaluate the relationships between your procurement department and any stakeholder.

The “suppler classification report”, provided below, helps you to classify any supplier. We believe that the very detailed lists based on VDA 6.x, that are used by most of the experts for “supplier development” or “supplier management”, are unnecessary in the beginning.

Our list rather focuses on the initial process, when you start to build a relation with a supplier. As always, the information in our provided forms is exemplary and needs to be adapted by you.