What needs to be seen in corporate procurement
Operational provision of services: Process organization
Processes in the company: process organization
After you commented on the structures of your company in the previous chapter in the business plan, the focus is now on the processes.
While the structure of the company is summarized under the term organizational structure, the processes are grouped under the term process organization. The process organization is not only about the connection of processes such as procurement and purchasing, production and manufacturing as well as sales and distribution, but above all about the efficient organization of the processes. This leads directly to the question of where the core competencies for your operational provision of services lie. Do you have advantages over your competitors in procurement and purchasing, for example, or in sales and distribution?
Business performance: your core competencies
The operational provision of services is fundamentally divided into the three stages of purchasing, production and sales, as shown in the following graphic for the process organization. Describe what you are concentrating on and what exactly you are doing at the respective stage in the production of operational services.
Procurement and purchasing - preliminary work
The aspect of procurement and purchasing as part of the process organization plays an important role, especially when it comes to the question of costs and quality. The procurement costs often determine a substantial part of your sales price and thus your profit. The quality in the area of procurement and purchasing is particularly important for high-quality products, because this is the only way to convince customers to buy. When it comes to procurement and purchasing, deal with the following questions for your operational organization as part of the process organization:
- To what extent do you use suppliers in procurement and purchasing?
- Which raw materials / products or services do you buy?
- How do suppliers contribute to your end product?
You can also name special suppliers in the business plan if you are in negotiations with them or have already concluded contracts. Then also highlight the respective strengths of your partners. But also check which dependencies you may have in the area of procurement and purchasing and which risks result from this for your process organization.
Production and manufacturing - manufacturing and service provision
After you have dealt with the subject of procurement and purchasing, the second step in the process organization is: production and manufacturing.
- Which stages of the production of the product does your company take care of itself?
- What do you have to use in the area of production and manufacturing?
- Do machines have to be bought for production and manufacturing?
- What are the costs for this?
- Do you use certain processes in production and manufacturing that give you a competitive advantage?
- Do you outsource parts of the production and manufacturing to third parties?
- Are there any risks in production and manufacturing?
- Do you have sufficient storage capacity?
- Can you quickly absorb disruptions in production and manufacturing for your process organization?
Production and manufacture are then followed by sales and distribution and complete the operational provision of services.
Sales and distribution
The third step for the operational provision of services is sales and distribution. Of course, this is particularly important for the process organization and for the operational provision of services, because only here does it become apparent whether you can also earn money with your offer.
- How are sales and distribution organized in your company?
- Do you rely on your own sales department or do you work with sales partners?
- What are these and what are the advantages for sales and distribution?
- What commissions are due for the sales partners?
- Do you or your employees have relevant experience in sales and distribution?
In addition to the classic elements for operational service provision such as procurement and purchasing or sales and distribution, some companies focus on other factors: Some companies conduct extensive research and development in order to improve their services and products. Or they concentrate completely on research and development and sell their inventions on to companies, which then take over production and manufacture as well as sales and distribution.
Define your core competencies
If you take a close look at the operational provision of services and the process organization of your company in the business plan, you clearly show which tasks your company takes on itself and why you use external service providers or suppliers. The guiding principle for the operational provision of services is that you concentrate on your strengths and are only active in your core competencies - for example, on sales and distribution. You buy the rest or let others do the rest. Also go into how the processes are interlinked in the operational organization.
Example of operational provision of services: T-shirt printing
They want to print and sell T-shirts. Your core competence is printing, as you have mastered various techniques and the machines here. Then the description for the operational provision of services and process organization could look like this:
Procurement and purchasing - preliminary work: You don't make T-shirts yourself, you buy the T-shirts from the manufacturer. Perhaps you opt for particularly high-quality t-shirts and therefore only want to buy t-shirts made of organic cotton. To do this, you need to look for a suitable supplier who will also provide relevant evidence. You have to buy the ink too - there are big differences here, too. Do you design the t-shirts yourself? If not, that is also an advance payment that you have to buy. Perhaps you always work with a specific designer here.
Production and manufacturing: You take care of all the printing with your own machines: due to various, high-quality processes, you see production and manufacturing as your core competency for operational provision of services.
Sales and Distribution: You decide to have your own online sales. You have also found shops that specialize in the sale of ecological textiles and are entering into a distribution cooperation with them.
Using this example, you can break down the operational process for each company into its individual components of the operational organization. Differences for the operational provision of services and the process organization result in particular from the complexity of the company and its performance.
In addition to the main processes of the operational organization, there are also supporting processes for the operational provision of services where you have to decide who will take care of it:
- IT processes (Maintenance of the IT landscape, server): Do you have a technician in the company or do you conclude a service and maintenance contract?
- Design and layout: who designs flyers, brochures, etc.
- Event management: who takes over the organization of events
- Website: who maintains and extends the website?
- communication: who is responsible for communication with the press?
You can employ your own staff or commission service providers for all of these processes. In the business plan, you should address the processes relevant for your company at this point for the provision of operational services.
To the value chain
After describing the operational provision of services and the process organization of your company, in the next chapter you will go into the position of your company in the entire value chain.
As editor-in-chief, René Klein has been responsible for the content of the portal and all publications by Für-Gründer.de for over 10 years. He is a regular interlocutor in other media and writes numerous external specialist articles on start-up topics. Before his time as editor-in-chief and co-founder of Für-Gründer.de, he advised listed companies in the field of financial market communication.
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