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House of purchasing and supply

How can house of purchasing and supply support strategic choice or positioning?

AccessibleStrategicIndividual2 min read

Contents

The house of purchasing and supply is a framework developed by A.T.

The House of Purchasing and Supply is an A.T. Kearney framework for assessing and developing the procurement function. It grew from the firm’s 1996 study of leadership practices in procurement, which involved seventy-seven high-performing organisations across industries in North America and Europe. The “house” groups more than 100 diagnostic items into eight rooms across three levels: direction setting, core procurement and supporting or enabling processes.

When to use it

Use the framework to diagnose how procurement supports business strategy, identify capability gaps, compare practices with a relevant benchmark and coordinate an improvement programme. It is most helpful when leaders need a whole-system view rather than an isolated sourcing or cost-reduction initiative.

Origins

Consulting firm A.T. Kearney developed the model from its international research into procurement leadership practices. The initial study and later Assessment of Excellence in Procurement programme translated observed differences between stronger and weaker functions into a structured benchmark. Its age means that organisations should retain the architecture while updating individual practices for current technology, regulation, resilience and responsible sourcing.

What it is

Direction-setting processes

1	Procurement strategy. Connect supply-market opportunities to business strategy, using procurement to support innovation, cost leadership, risk management and revenue creation.
2	Organisational alignment. Place procurement knowledge and accountability in the business processes where demand and supplier decisions arise.

Core procurement processes

3	Sourcing. Apply disciplined category and sourcing methods across the expenditure base, clarifying where external supply creates value and where internal capability is strategic.
4	Supplier relationship management. Segment relationships and balance collaboration, innovation and value creation against dependency, continuity, conduct and performance risks.
5	Operating process management. Standardise, simplify and appropriately automate transactional work while retaining controls, accessibility and human judgement where needed.

Supporting processes

6	Performance management. Link procurement measures to enterprise outcomes and make its financial, operational, risk and sustainability contribution transparent.
7	Knowledge and information management. Maintain trusted data and share intelligence across processes, regions, business units and external relationships.
8	Human resource management. Build procurement capability through recruitment, development, incentives and purposeful movement of high-potential professionals across the organisation.

How to use it

Define the assessment scope, stakeholders and comparison group before scoring the rooms. Gather evidence from data, process observation, procurement staff, internal customers and suppliers rather than relying on one respondent’s perceptions. Rate both capability and business outcomes, identify dependencies between rooms and select a small number of improvements with accountable owners.

Where the Assessment of Excellence in Procurement questionnaire and benchmark are available, compare results with organisations that have reasonably similar scale, sector and supply risk. Convert the findings into a sequenced roadmap, establish a baseline and repeat the assessment periodically to monitor progress. Treat benchmark gaps as prompts for investigation, not automatic targets.

Final analysis

The model’s main strength is coverage: it makes clear that excellent procurement depends on strategy, operating processes, information, people and organisational alignment together. Benchmark data can make repeated assessments useful, particularly in large or geographically distributed organisations.

The underlying study began with 50 respondents and expanded to more than 600. That reach supported a common vocabulary, but does not remove self-reporting, sample and age effects. A full assessment can be time-consuming, and limited public methodological detail makes the benchmark difficult to interrogate. Supplement it with current evidence and procurement outcomes.

Top practical tip

Use the rooms to trace connections between problems. A sourcing weakness may originate in strategy, information, skills or alignment, so improve the system rather than treating the visible symptom alone.

Top pitfall

Do not equate a benchmark score with business value. Verify the evidence, account for organisational context and update legacy practices before investing in a gap-closing programme.