The official business definition of a Procurement Operating Model is a comprehensive framework for structuring, managing and optimizing the end-to-end procurement process. It is a set of components, activities and processes that are designed to increase efficiency, reduce costs, and meet organizational objectives. This model involves the alignment of the procurement function with the organization’s strategy and operational goals. It is a continuous improvement process, which includes the development of a procurement strategy, the implementation of the strategy, and the ongoing process of performance management and improvement.
The Procurement Operating Model involves the identification and assessment of the organization’s needs, the development of a clear strategy, the selection of appropriate vendors, the negotiation of contracts, the monitoring of vendor performance, the measurement of cost savings, and the implementation of continuous improvement and process innovations.