The Pareto Principle has expression in many fields of procurement. One is that a small number of categories represent the majority of the total spend and a small number of suppliers cause a disproportionate number of the problems. The principle has also evolved into the ’80:20 rule’, which underpins many situations in economics and management where scarce effort needs to be focused to best effect. For example, if 20% of all purchase transactions account for 80% or more of the total spend, focusing on these acquisitions, so that managerial effort is used to best effect can optimise the return on procurement effort. Pareto analysis is usually seen as one dimensional, as it does not consider the business impact of the categories, or the market complexity. See also Portfolio Analysis.
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Discover the world’s largest Glossary of Procurement terms
With over 800 Procurement specific terms (and growing) you will find everything you need to know or thought you knew about the Procurement function. Our aim is to provide you with a comprehensive list collated from the Comprara Groups hub of training and procurement consulting source materials.The Procurement Glossary has been compiled by industry expert Paul Rogers.
