Procurement Process Improvement

Procurement focus on OpEx 5x more than CapEx. Or get involved so late in CapEx it’s like lipsticking a pig. This can be dangerous to a company’s bottom line. So, how do we fix that? Let’s look at the differences first: CapEx Procurement: ➟ Purchases are often one-offs ➟ Large Purchases & for long-term use ➟ Likely custom made purchases OpEx Procurement: ➟ Weekly / Monthly payments ➟ Everything from software, raw materials to packaging ➟ Repeatable purchases How should we approach CapEx more effectively? 1. Don’t apply processes based on repeatability to CapEx CapEx is a one-time purchase and often something unique. Procurement teams working on CapEx projects need to focus on specifics: e.g. that all requirements are met, the budget & delivery timeline are delivered. 2. Track costs associated with change orders long after the contract has been agreed. Change orders can be a big part of Capital Expenditure and often even the scope changes long after the deal has been agreed. Procurement should ally with finance to keep track of the longer term financial outcomes. 3. Don’t muddy the waters between recurring costs and the one-time investment Specifications for CapEx are rarely “off the shelf”. You’re sourcing a unique product or deliverable. But some CapEx projects may have OpEx applicable components. E.g. a new building may well have recurring expenditures (e.g. network, maintenance, security). Keep visibility of these by separating them out instead of having them rolled into a blanket invoice. --- And here’s how Procurement can really add value in the sourcing process: ✅ In one major CapEx investment I supported 6 years ago, we put the emphasis on multimedia (blueprints, drawings, schematics) and full days of workshops and tours with all the bidders together in one place. This better communicates the requirements, helps the bidders ask the right questions and streamlines your time (not having to contact each supplier individually) ✅ Leave room in your RFP for true flexibility. Suppliers who deal with CapEx projects are often highly specialised and may well be in a better position to advise on the best approach to take than anyone from within your organisation. ✅ Make sure you have a detailed breakdown of costs in the bid responses. This helps proper analysis and supplier comparison. It also enables you to focus on the most expensive components to reduce the overall project expense. ✅ Use predictive insights and client reference calls By asking the right questions you can get a good barometer of how often and how much the change requests might cost. ——- What do you think of this advice? What would you add? Let me know in the comments. Hope that helps! Feel free to tag someone in your team who could find this helpful or ♻️ repost it to your network.

Running procurement without Contract Management is like driving blindfolded. You might get somewhere, but the crash is inevitable. Contract Excellence | 11 NOV 2025 - Contract management is the process of overseeing contracts throughout their entire life cycle, from drafting, negotiation, execution, compliance monitoring to renewal, termination or closure. Procurement secured a great price...Fantastic! But without robust contract management, that "win" is fragile. Here's why: 7 Reasons Why Contract Management is Non-Negotiable for Procurement. #1. Value Protection ↳Ensures negotiated terms are delivered. ↳Prevents price creep and scope drift. #2. Risk Mitigation ↳Manages regulatory/internal compliance. ↳Ensures obligations e.g insurance are met. #3. Visibility & Control ↳Stops maverick spending dead in its tracks. ↳Provides a single source of truth for contract administration. #4. Efficiency Gains: ↳Automates renewals, approvals, and alerts. ↳Frees procurement from firefighting to focus on strategic sourcing. #5. Supplier Relationship Health ↳Enables proactive performance reviews. ↳Promotes collaborative issue resolution based on agreed terms. #6. Data-Driven Decisions ↳Provides performance and compliance data. ↳Enhance smarter sourcing strategies, supplier development, and future negotiations. #7. Unlocks Innovation ↳Facilitates clear terms and good governance. ↳Creates stable foundation for suppliers to propose innovative solutions Contract Management is a crucial bridge between negotiation & value realization. Without active contract management, even the best deals unravel: 🚫Savings promised is lost in invalidated invoices. 🚫Performance guarantees is forgotten 🚫Compliance requirements is Ignored 🚫 Renewal deadlines are missed True procurement success is measured after the ink dries. Don't let your hard-won deals vanish into a black hole. Integrate contract management deeply into your procurement lifecycle. Only way to capture and sustain the value you fought for. Neglecting Contract Management turns procurement into a transactional function! Embracing it elevates procurement to a strategic value protector and business partner. ♻️ Repost to help someone in your network. ➕️ Follow Frederick for more procurement insights. #Procurement #ContractManagement #RiskManagement #ValueCreation

𝗪𝗵𝗮𝘁'𝘀 𝘁𝗵𝗲 𝗠𝗮𝗿𝗶𝗮𝗻𝗮 𝗧𝗿𝗲𝗻𝗰𝗵 𝗼𝗳 𝗣𝗿𝗼𝗰𝘂𝗿𝗲𝗺𝗲𝗻𝘁? It's the deepest, darkest place in Procurement, where even the best-negotiated savings can quickly get lost, right at the handover between contract signing and operationalisation. Sounds familiar? Here’s what typically happens: 1️⃣ 𝗔𝗻 𝗶𝗻𝗲𝗳𝗳𝗲𝗰𝘁𝗶𝘃𝗲 𝗵𝗮𝗻𝗱𝗼𝘃𝗲𝗿 𝗯𝗲𝘁𝘄𝗲𝗲𝗻 𝘁𝗵𝗲 𝗣𝗿𝗼𝗰𝘂𝗿𝗲𝗺𝗲𝗻𝘁 𝗮𝗻𝗱 𝗢𝗽𝗲𝗿𝗮𝘁𝗶𝗼𝗻𝘀 due to a gap in planning execution. As Procurement Teams shift to the next deal, Operations teams lack understanding of critical conditions, service levels or clauses to manage the contract effectively and realise the savings. 2️⃣ 𝗠𝗮𝗻𝘂𝗮𝗹 𝗺𝗼𝗻𝗶𝘁𝗼𝗿𝗶𝗻𝗴 𝗼𝗳 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁 𝗰𝗼𝗺𝗽𝗹𝗶𝗮𝗻𝗰𝗲 𝗳𝗮𝗶𝗹𝘀 due to the complexity of details to track. Milestones, price formulas and performance guarantees need to be continuously checked, followed and discussed. 3️⃣ 𝗦𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝘂𝗻𝗱𝗲𝗿𝗽𝗲𝗿𝗳𝗼𝗿𝗺𝗮𝗻𝗰𝗲 𝗶𝘀 𝗻𝗼𝘁 𝗮𝗰𝘁𝗶𝘃𝗲𝗹𝘆 𝗽𝗿𝗲𝘃𝗲𝗻𝘁𝗲𝗱 𝗼𝗿 𝗱𝗲𝘁𝗲𝗰𝘁𝗲𝗱 due to late or irregular contract performance reviews, meaning the agreed-upon terms—those that ensured savings—are not met. 4️⃣ 𝗦𝗰𝗼𝗽𝗲 𝗰𝗿𝗲𝗲𝗽 𝘀𝘁𝗮𝗿𝘁𝘀 𝗲𝗮𝘁𝗶𝗻𝗴 𝗶𝗻𝘁𝗼 𝘁𝗵𝗲 𝘀𝗮𝘃𝗶𝗻𝗴𝘀, with small requests snowballing quickly into major overspend. If this isn’t managed tightly, the costs start to rise, chipping away at the negotiated savings. 5️⃣ 𝗟𝗮𝗰𝗸 𝗼𝗳 𝗰𝗹𝗮𝗿𝗶𝘁𝘆 on responsibilities, escalation points, and vague deliverables leaves room for interpretation, making it difficult to hold suppliers accountable. Issues may escalate slowly or remain unresolved. The solutions to avoid the big sinkhole - the Mariana trench of Procurement ? Proper 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁 𝗟𝗶𝗳𝗲 𝗖𝘆𝗰𝗹𝗲 𝗠𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 which goes beyond implementing a tool to store a signed contract and starts with: ✔️𝗔 𝗰𝗹𝗲𝗮𝗿 𝗰𝗼𝗻𝘁𝗿𝗮𝗰𝘁 𝗵𝗮𝗻𝗱𝗼𝘃𝗲𝗿 𝗮𝗻𝗱 𝗼𝘄𝗻𝗲𝗿𝘀𝗵𝗶𝗽 𝘀𝘁𝗿𝘂𝗰𝘁𝘂𝗿𝗲, so all stakeholders know who is responsible for execution, monitoring, and resolving issues. ✔️ 𝗔 𝘀𝗶𝗻𝗴𝗹𝗲 𝗖𝗼𝗻𝘁𝗿𝗮𝗰𝘁 𝘁𝗼𝗼𝗹 and source of truth for all teams, Procurement, Operations and Legal, ensuring everyone is on the same page. ✔️𝗔𝘂𝘁𝗼𝗺𝗮𝘁𝗲𝗱 𝘁𝗿𝗮𝗰𝗸𝗶𝗻𝗴 of milestones, deadlines, and compliance checks to ensure that nothing is missed and performance stays on track. ✔️𝗔𝗜-𝗽𝗼𝘄𝗲𝗿𝗲𝗱 𝗶𝗻𝘀𝗶𝗴𝗵𝘁𝘀 to flag potential risks, monitor contract performance, and alert teams on potential scope creep before it becomes a major issue. ✔️𝗣𝗿𝗼𝗮𝗰𝘁𝗶𝘃𝗲 𝘀𝘂𝗽𝗽𝗹𝗶𝗲𝗿 𝗺𝗮𝗻𝗮𝗴𝗲𝗺𝗲𝗻𝘁 with regular vendor performance reviews & real-time tracking of scorecards to prevent supplier underperformance. Signing a contract is only half a deal done , the real work begins with an effective operationalisation. Don't let your savings sink into the trench! ❓What else do you suggest to do to avoid the Procurement trench and the savings sinkhole. #procurement #contractmanagement #CLM #AI #automation

Steering through the CapEx procurement process is akin to navigating through a maze—every choice, especially vendor selection, critically shapes the project’s outcome. Reflecting on my journey, here's a distilled essence of what we've learned, particularly about the metrics that matter: - Vendor Performance: The true measure of a vendor isn't found in their promises. Selecting a vendor purely on financial terms without evaluating their quality and capabilities, is a misstep that might divert you from your intended outcome. Their ability to deliver on time, within budget, and to the required quality is critical. This should be studied from their past jobs and feedback from past clients. When they miss the mark, it's not solely on them—it reflects on our initial selection, converting what should be collaborative progress into a series of hurdles. - Price Benchmarking: It's crucial to match the cost with the job/project's true worth. Hence, it is necessary to do the price benchmarking not just among the vendors but also from the internal cost estimation. The team must have knowledge about the factors affecting the quoted amount for fair negotiations. - Procurement TAT: The duration from initiating engagement with vendors to issuing the purchase order speaks volumes about operational efficiency. In quite a few cases, it was detrimental to see extremely high pressures on execution timelines - while procurement TATs have been relaxed. A prolonged cycle time signals underlying inefficiencies, setting unrealistic expectations for the project teams and vendors and complicating the project for all stakeholders. Navigating procurement effectively hinges on structured methods to acquire vendor intelligence and assessment and bring process efficiency. In sharing these insights, the goal is to refine our collective approach to procurement. The right insights lead to the right decisions, setting us on a course for undeniable success. #ProcurementWisdom #VendorIntelligence #NavigatingSuccess

Malbek recently hosted a dinner with a small group of legal leaders to discuss Contract Lifecycle Management trends and how AI technology might enhance CLM solutions. Our conversation highlighted some key areas ripe for AI/CLM collaboration: 1) Pre/Post M&A Due Diligence - Streamline extraction of critical contract information - Create intelligent summaries for business stakeholders - Track and manage due diligence obligations with automated reminders 2) Intelligent Workflow Optimization - Provide in-context guidance within Teams/collaboration tools - Execute tasks proactively rather than simply suggesting next steps - "don't make a list, just do it" - Automatically route contracts to appropriate approvers based on content 3) Document Analysis & Process Improvement - Extract key data points from contracts and related documents - Generate actionable insights for process optimization - Identify bottlenecks and recommend specific workflow improvements 4) Enhanced Contracting - AI-powered contract intake via conversational interface - Mass amendment capabilities with intelligent targeting - Smart identification of contracts requiring bulk amendments - Precise budget forecasting based on contract obligations 5) Guided Self-Service Workflows - Step-by-step guidance for users through complex processes - Built-in guardrails and best practices - Reduced dependence on legal team for routine matters #legaltech #innovation #law #business #learning

Day 2 learnings at the WCC event in Berlin. If you go “digital” in contractmanagement, the biggest risk is treating it as a tooling project. In practice, digital only works when you build a shared foundation first, then standardise, then automate, and only then scale adoption through behaviour and culture. Here’s a pragmatic step-by-step sequence that works. 1) Start with a uniform language (before you touch systems) If different teams use different words for the same thing, your data model will be inconsistent from day one. Align on a shared vocabulary and definitions, for example: contract types, obligations, milestones, change requests, claims, variations, approvals, risk categories, and ownership. This is not “nice to have”. It is the basis for clean reporting, reliable workflows, and meaningful automation later. 2) Do a cross-functional painpoint analysis (end-to-end) Digital contract management is cross-functional by nature: procurement, legal, contract management, finance, operations, and sometimes sales. Map the full lifecycle and identify painpoints together. Focus on where value leaks today, such as: handovers, unclear accountability, missing data, late approvals, uncontrolled changes, poor visibility of obligations, and recurring exceptions that are “handled in email”. 3) Implement a best-practice process framework (make it stable first) Before automating anything, implement a process framework that is clear, repeatable, and measurable. Define: - roles and decision rights - minimum required data per phase - standard workflows and gates - templates and playbooks - KPIs that reflect performance and compliance The goal is stability: a process that people can execute consistently, even without automation. 4) Once stable: automate the hell out of it (but only what you understand) Now you can digitise and automate with confidence: workflow routing, reminders, obligation tracking, dashboards, audit trails, integrations, and exception triggers. Automation should reduce friction and increase control. Not hide process weaknesses. If you automate a broken process, you simply get broken outcomes faster. 5) Then the real work starts: culture and behaviour (adoption is the multiplier) Processes and tools can look perfect on paper, but without adoption they will not fly. This is where many “digital transformations” stall. Plan explicitly for: - coaching and guidance in daily work - process support (someone must own questions and improvements) - error and exception handling (because reality never fits the happy flow) - feedback loops and continuous improvement - leadership behaviour that reinforces the new way of working Digital contract management is not a one-off implementation. It is a capability you build. If you follow this sequence: language → painpoints → framework → automation → behaviour. You create a foundation that scales, instead of a toolset that disappoints. #contractmanagement

The US Army's new UAS “marketplace” approach to drone procurement is a fundamental shift from slow, rigid acquisition cycles into a more open, competitive system. The new approach aligns with United States Department of Defense’s broader directive, “Unleashing U.S. Military Drone Dominance,” which calls for equipping every squad with low-cost, expendable drones by end of 2026. In Germany, the 2nd Cavalry Regiment staged a mass display of FPV drones to show how quickly and cheaply these systems can be produced and deployed. Still, these steps come with challenges; soldiers in field exercises continue to encounter issues like GPS failures, video-feed drops, and gear fragility - reinforcing the need for rapid iteration and soldier feedback in real time. Why this matters:   •  Ukraine’s drone units are proving this point in real-time: decentralized, high-cadence drone deployment upended norms and delivered real asymmetrical advantage. Open-access platforms such as Ukraine’s Brave1 marketplace have accelerated adoption of force multiplying technology on the battlefield.   •  This new marketplace approach mirrors that lesson, offering a system that evolves with soldier feedback, not antiquated procurement cycles.   •  At PDW, our vision for AM-FPV drone engineering will operate exactly this way: rapid prototyping, field validation, operator-driven refinement. Now, there’s a scalable mechanism to get those iterations into warfighters’ hands fast. PDW is proud to be a part of the U.S. Army’s transforming-in-contact initiative, aimed at getting the best technology in our soldiers’ hands at the speed of modern conflict. https://lnkd.in/deyZFMEG

The U.S. is following Ukraine’s lead in defense innovation. This fall, the U.S. Army will launch a new online marketplace for purchasing unmanned systems — an “Amazon-like” platform that will allow units to select vetted solutions by price and performance, bypassing the lengthy bureaucratic acquisition process. The approach closely mirrors Ukraine’s BRAVE1 Market, introduced earlier this year, which enables frontline units to quickly discover and deploy needed technologies — from drones and electronic warfare tools to AI-based systems and software. A strong example of how battlefield-driven innovation and Ukraine’s successful experience are shaping defense procurement practices worldwide. https://lnkd.in/dF76DUFU

🚀 Cost Saving Strategies in Procurement 🚀 true cost savings are not just about negotiating a lower price — they come from strategic sourcing, smarter contracting, and efficient processes. 🔹 1) Sourcing & Vendor Strategies • Vendor consolidation: Bundle volumes with fewer suppliers to unlock scale discounts and stronger partnerships. • Global/alternate sourcing: Explore imports or regional suppliers for competitive pricing and risk diversification. • Multi-vendor strategy: Keep healthy competition alive and avoid supplier dependency. • Long-term contracts / rate agreements: Hedge against inflation and lock prices for stability. • Reverse auctions: Use e-bidding to drive competitive pricing transparently. • Supplier development programs: Support suppliers in cost reduction (lean practices, technology, financing) so benefits flow back to you. This 🔹 2) Negotiation & Contracting • Total Cost of Ownership (TCO): Look beyond upfront cost to include maintenance, warranty, spares, disposal, and lifecycle cost. • Payment terms optimization: Balance cash flow with early payment discounts or extended credit. • Standardization of specifications: Avoid over-engineering and unnecessary customization that inflates costs. • Volume commitments: Offer consistent demand in exchange for better pricing and service. 🔹 3) Process Efficiency • Procurement automation (ERP/PO automation): Reduce administrative effort, save time, and minimize errors in repetitive buys. • Demand planning & forecasting: Align with business needs, avoid stockouts, and reduce urgent “premium” purchases. • Contract compliance monitoring: Prevent leakage and enforce negotiated terms to maximize realized savings. 💡 Procurement cost savings aren’t just about lowering spend — ✔ Improve cash flow & working capital ✔ Strengthen supplier relationships ✔ Enhance resilience in uncertain markets ✔ Build a competitive edge for the business #Procurement #SupplyChain #CostOptimization #StrategicSourcing #Negotiation #ProcessExcellence

You probably missed the most important defense reform Ukraine just announced. The Ministry of Defense is introducing an automated model where procurement requests for drones will be generated from battlefield data rather than manually. Until now the process looked familiar to most armies: Units → submit requests → headquarters consolidates demand for specific models→ procurement begins. In reality this often created what soldiers call a “zoo of solutions.” Different standards. And sometimes systems that perform poorly in real combat. The new model flips the logic. Demand will be formed automatically based on real battlefield performance. Here is how it works: The General Staff formulates procurement requirements based on technical parameters rather than specific models. Data from systems like Misson Control, DOT-Chain Defense, e-Points and Brave1 Market automatically match technical requirements with top products based on battlefield performance. In simple terms: The battlefield generates the data. The data generates demand. If a drone proves effective — demand increases. If it doesn’t — the system simply stops requesting it. The funding model also reflects this logic: • ~80% of procurement goes to solutions proven in combat • ~20% remains reserved for experimentation and new technologies This creates something rare in defense procurement: automated connection between the battlefield performance and supply decisions. In a war where technologies evolve every few months, traditional procurement systems simply cannot keep up. Ukraine is now building a system where combat results directly shape the arsenal. #globalpolitics #warfare #technologies #defensetech #dualuse #procurement