At a tactical level (operations, process), etc., it doesn’t change from Company to Company, but how Procurement is perceived does change from Company to Company.
It would be best if you did not assume that what worked in one Company will work in another.
Start with interviewing your key stakeholders to understand the expectations for the procurement department.

The goal is to uncover the underlying issues in the organization, whether it is people or processes.
You can ask a more clarifying question to understand the situation better, but this exercise should provide you with a good starting point.
Next, you should talk to key operations stakeholders. The goal is to identify what are the key expectations from Procurement. Here is why you should do this
First and foremost, it gives you a good start. Your stakeholders would be happy that you are making the effort to understand key business issues before developing a plan on how to help them.
It will provide you with an understanding of the critical levers you need to pull to build strong stakeholder engagement.
It helps you with developing a game plan and the skill sets you would need to hire. For example, suppose your stakeholders tell you that they need to work with someone who understands your business. In that case, that means deep category knowledge is essential to work with that stakeholder..

Start with the Chief operating officer (COO) or equivalent designation in your Company. The goal here is to identify the key expectations they have from Procurement.
Please keep in mind that at this time, you should not be telling them how you can help, but the goal is to understand what help they need.

The primary function of purchasing is to enable the end-to-end procurement transaction. Generally, a purchasing team is responsible for:
Ensuring that the purchasing process and systems are in place to receive user requisitions and proper authorization of the Spend.
Ensure that the organization has a simple purchasing process.
Creating the purchase order and sending it to the vendor.
Escalating the orders to ensure timely delivery of the products and services required to operate the business.
Educating employees about the purchasing process.

Strategic sourcing involves working with vendors to negotiate better pricing. The key activities of the strategic sourcing process are as follows.

Set up a strategic sourcing process to ensure that all vendor evaluations follow a standard procedure.
Educate stakeholders on how the sourcing team evaluates vendors and the roles and responsibilities of the business vs. the sourcing team in a vendor evaluation process.
Run the RFX’s ( Request for Information(RFI) or Request for Proposal (RFP)) process with the vendors. RFIs are generally run to gather information for creating an RFP and asking vendors to submit their proposals.
Support the business with analysis of the RFP responses and help drive a decision that meets organizational goals.
Work with contract management to review vendor contracts and mitigate risk.
Own a savings target and be responsible for tracking procurement cost savings.

The contract management function is responsible for the following duties:

Provide standard contract templates for different products and services that your organization purchases. It includes defining standards for commercial and legal terms. Standards for commercial terms are set up in consultation with the finance and treasury departments.
Define standard fallback clauses and work with sourcing teams to enable sourcing self-service.
Review vendor contracts to ensure that they meet the defined corporate terms.
Work with a vendor legal to negotiate a contract
Set up a central repository for storing all contracts so that it is easy to find contracts and track critical dates like expiration and renewal dates.

Based on the requirements of your business, there are primarily three ways to structure your sourcing team.
Bonus: We have put together a template that gives you the best practices for structuring your sourcing team. Download our FREE Procurement Team Builder

Department-based Sourcing Team
In a department-based approach, you have a sourcing team member assigned to each department. She is then responsible for conducting sourcing for each of their departments.
Here are some pros and cons of this approach

Pros:
It is straightforward for stakeholders to know whom they should reach out to for sourcing events or evaluating vendors.
It is a great model for increasing stakeholder engagement.

Cons:
This model is not efficient in case there is not enough volume for the person managing that department.
This model doesn’t work in case you need specialized commodity knowledge because the person is a generalist and not a specialist for that category.

The basic assumption here is that you can divide your spending into big chunks of categories. Too few categories lead to unequal distribution of work. Too many defeats the purpose of organizing your Spend by categories because it is unmanageable

Pros:
It is a great approach where you need domain knowledge to source the category, such as telecom services, clinical research services, or other specialized projects.
It affords the sourcing/category manager to grasp the domain knowledge and manage the category through a category management plan.
Cons:
It is not a good approach for stakeholders if the stakeholders are purchasing multiple categories. For example, you have an IT hardware and software owner, and you have an owner for professional services. So your stakeholders always have to remember to reach out to two different sourcing team members based on what they are procuring.
It is not a good model for resource utilization unless you have a steady stream of sourcing activities. If an individual doesn’t have enough categories, then that could lead to inefficient resource use.

In this approach, you have an individual assigned to one or more departments. However, that individual is also responsible for a category or a set of categories.
That individual sourcing/category manager is then responsible for working with other category owners to satisfy the requirement of the department or set of departments assigned to them.
Pros:
This approach is suitable for stakeholder engagement because they have a single contact for all their sourcing needs.
Your sourcing team can still develop the domain knowledge for the primary category they are working on, which is a requirement for specific categories.

Cons:
It requires internal coordination within the sourcing team, and if not well managed, people can step on each other toes.

By now, you understand the critical requirements of your stakeholders. Based on that, you can choose a model that works best for your situation.
However, for generic commodity items like office supplies, Procurement is driving the vendor selection because the specifications are standard.

There are hard skills and soft skills. As per the recent Deloitte survey, CPOs are investing in both Hard and Soft skills

Negotiation Skills
Not every function within the department should be good at negotiation. For example, the purchasing person should be more focused on transactional metrics than negotiating with vendors.
However, if you are building the team, you probably would have limited resources, and the same person may be wearing multiple hats. You should specifically assess your negotiation skills while hiring.
There are two types of negotiation styles:
Tactical – give me the lowest cost
This is a day-to-day negotiation where the focus is to get the lowest cost. If you are purchasing a standard commodity item and there is enough supply in the market, you just need basic negotiation skills to get the best price possible.
If your primary Spend is commodity items, then a simple sourcing process and basic negotiation skills should suffice.

a) Strategic Sourcing Process
This is the foundation skill set for any good strategic sourcing professional. Now you can support your team by providing a good strategic sourcing process. In Simplifying your purchase process, we covered how to create an effective strategic sourcing process. If you start with something simple, have an essential process covering the steps from requirements gathering to awarding a contract to the vendor.

b) Market Research Skills
In most cases, your stakeholders would provide the list of suppliers to be included in the sourcing process. This is a prevalent scenario for commodity items or services, but what if your stakeholders don’t know enough suppliers for you to run an effective RFP?
In that case, your market research skills can help you identify new sources of supply for your next RFP.
Some critical skills in this area include using Google for supplier search and common publications, etc.

c) Understanding Business Needs
Another key aspect of strategic sourcing skills is to understand business needs.
Though that is the preferred method, it doesn’t give you complete requirements unless the sourcing team member can help shape them.
A stakeholder only wants a widget from manufacturer A, and that limits your negotiation power. Simple demand and supply.

Financial Aptitude
In today’s day and age, Procurement works hand in hand with finance to drive cost reduction targets, whether that is reducing EBITDA or reducing the working capital requirements.
We are not suggesting that Procurement needs to know all finance jargon, but they need to understand how their work impacts companies’ financial goals.
To summarize, they should understand the impact of cost savings on the Income statement.

Data Analytics Skills
Analytics skills are a must for sourcing professionals to analyze the spending data to identify savings opportunities.
Not only does it help with spend analysis, but it also helps in better presenting the cost savings data to the senior management.

Domain Knowledge
We have added domain knowledge as a complex skill because sometimes, certain categories need specific domain knowledge for your procurement team to be effective.
Of course, your new hires don’t need to be domain experts from common commodity items. Still, if you are handling specialized categories like telecom, healthcare, and network management, then that requires domain knowledge.

Empathy
Like any other department, Procurement is trying to implement the best practices for purchasing by working with the stakeholders. However, it is vital to have Empathy towards your stakeholders for Procurement to be considered a trusted partner.

Collaboration
Effective Procurement needs strong collaboration with various departments. Strong collaboration skills are required in all aspects of Procurement. Some examples where a strong partnership is required.
Working with department owners to align procurement strategy with their departmental goals
Working with suppliers to run an effective RFP
Coordinating the evaluation process with internal stakeholders during an RFP process

Procurement leaders are trying to address the procurement talent issue by hiring domain knowledge and then training for procurement skills.
The rationale is that you can always train individuals on procurement skills later.
The other common scenario is areas where Procurement has limited engagement, and this could be used as a tactic to increase stakeholder engagement.

In this case, you are hiring procurement talent from outside who might or might not have domain knowledge.
The key assumption here is that domain knowledge is important, but it is not super critical for the functioning of the procurement department.
Where It Makes Sense?
When you start the procurement department, your focus mostly be on Indirect commodities.
If you are in a service industry, most of your spending would be in the Indirect spend bucket, which means you can live without specific domain knowledge to begin with.
When you are hiring a generalist, the goal should be that they can get some quick wins so that you can establish procurement value.

Spend analysis tools are primarily meant for sourcing and data analyst teams to analyze historical spending data to identify patterns and saving opportunities.
Any good spend analysis tool helps you classify the historical spend data into category buckets and then provides analytics to support the decision-making process.
ProNow spend analysis tools make sense when you have disparate systems and good line descriptions. The tool can then harmonize the data into one standard classification schema and provide granular visibility at the line item level.curement

eSourcing technologies help strategic sourcing professionals automate the RFI/RFP process and enable them to handle more volume.
When you are starting the procurement department, you would probably have limited opportunity to run RFP’s. This is for two reasons:

You are trying to understand the Spend better so that you can identify saving opportunities.
The focus, in the beginning, should be to automate the purchasing process so that the transactions are taken care of and you can get the product when you need it and where you need it.
The two main benefits an eSourcing tool provides is that
It helps to gather data in one single place so that you can easily compare the results from suppliers instead of manually collating all the responses in one single place.
It makes it easy to get feedback from the stakeholders and rate the vendor scores to get a total score for each supplier.

Contract management technology serves two purposes.
1. It allows you to store Contracts in one single place with rich information. Having rich data about contracts helps you track key renewal dates, understand contract risks, and so on. The most significant benefit is that you don’t have to keep looking in people’s drawers for contracts.
2. It allows you to draft new contracts quickly. If you always like to use your contract copy, this is a good option. Having a contract tool for creating new contracts enables the legal department to provide standard clauses and fallbacks.

You are trying to understand the Spend better so that you can identify saving opportunities.
The focus, in the beginning, should be to automate the purchasing process so that the transactions are taken care of and you can get the product when you need it and where you need it.
The two main benefits an eSourcing tool provides is that
It helps to gather data in one single place so that you can easily compare the results from suppliers instead of manually collating all the responses in one single place.
It makes it easy to get feedback from the stakeholders and rate the vendor scores to get a total score for each supplier.

Supplier Information And Performance Management
Supplier information management tools allow you to store more information about your suppliers. For example, your accounting system might have primary fields like tax ID, name, and location. However, using a supplier information management system, you can store information like insurance certificates, diversity certificates, capability information, etc.
Supplier performance management tools help you create, measure, and track performance scorecards for your suppliers.

Procure to pay, or e-procurement automates your end-to-end purchasing process, including invoices and, in some cases, payments.
This use case covers the automation of the purchasing process, which includes

The ability for end-users to create requisitions. This also includes creating requisitions from catalogs so that Employees can direct spending to the preferred vendor.
The ability for the spending to be authorized at the correct organization level. This not only allows for cost control but allows the purchasing team to review the Spend before it happens.The last step in this process is to send the purchase order to the supplier. Based on the supplier’s capabilities and the capability of your system, you can send the orders via EDI, email, or through a supplier portal.

Purchase And Invoice Use Case
This case covers the automation of the purchase order and invoice process. The idea is to have the end-to-end process in one system to be efficient for the Procurement and Accounts Payables team. The entire process is streamlined, and that ensures faster processing of the documents. This use case needs close collaboration with your Account payables team.
This use case covers the steps mentioned in the purchasing use case and the following steps.

The ability for employees to create receipts for the ordered items. The receipts can be created by the users who ordered the product (Desktop receiving) or by a central logistics team (central receiving). If your users don’t create receipts, we recommend starting with central receiving and moving to desktop receiving after your users have adapted to the new process.
It also includes the ability for supplier invoices to be created in the system. Whether the invoice needs to be entered manually in the system or the process is completed automated – depends upon the capability of the vendors and the system’s capability.

The standard mechanism includes EDI (Electronic Data Interchange), email, and cXML. Don’t worry about the jargon; your procurement system vendor should be able to take care of this for you.

The third step in this process is to match all the documents and enable touchless invoicing. That means a two-way (match PO and Invoice) and a 3-way match (match PO, Invoice, and Receipts) to ensure that the data is consistent across all three documents.
The fourth step is payments to the vendors. This may or may not happen in the purchasing system as most companies prefer to use their accounting system for payments.

Procurement leaders are trying to address the procurement talent issue by hiring domain knowledge and then training for procurement skills.
The rationale is that you can always train individuals on procurement skills later.
The other common scenario is areas where Procurement has limited engagement, and this could be used as a tactic to increase stakeholder engagement.

In this case, you are hiring procurement talent from outside who might or might not have domain knowledge.
The key assumption here is that domain knowledge is important, but it is not super critical for the functioning of the procurement department.
Where It Makes Sense?
When you start the procurement department, your focus mostly be on Indirect commodities.
If you are in a service industry, most of your spending would be in the Indirect spend bucket, which means you can live without specific domain knowledge to begin with.
When you are hiring a generalist, the goal should be that they can get some quick wins so that you can establish procurement value.

Procurement leaders are trying to address the procurement talent issue by hiring domain knowledge and then training for procurement skills.
The rationale is that you can always train individuals on procurement skills later.
The other common scenario is areas where Procurement has limited engagement, and this could be used as a tactic to increase stakeholder engagement.

In this case, you are hiring procurement talent from outside who might or might not have domain knowledge.
The key assumption here is that domain knowledge is important, but it is not super critical for the functioning of the procurement department.
Where It Makes Sense?
When you start the procurement department, your focus mostly be on Indirect commodities.
If you are in a service industry, most of your spending would be in the Indirect spend bucket, which means you can live without specific domain knowledge to begin with.
When you are hiring a generalist, the goal should be that they can get some quick wins so that you can establish procurement value.