Companies are seeking more aggressive savings from procurement. These savings can come from cost reductions, greater operational efficiency and improved cash management. As far as the top management is concerned, the savings must come!
Probably the pressure to achieve savings is what leads to these common responses by procurement staff to their suppliers and internal customers;
“We were asked to get new quotations” – agility is needed
“ICT department has taken over that process” – you need some muscle
“I am still waiting for approval” – speed is lacking
“Finance said the cost is too high” – probably speed, muscle and agility are lacking
Procurement professionals are busy just like everybody else. Between juggling multiple projects and communicating across departments, there are many factors that make it necessary to streamline processes to maximize efficiency. The need for speed, agility and muscle is very critical.
Do you need to speed up procurement processes in your organization? If yes, these tools and resources will come in handy.
Do Research Before Making a Purchase
Procurement reduces costs while obtaining the items a company needs. Yet simply creating a purchase order for every request that comes in doesn’t mean costs are actually being reduced, in fact, often it means the opposite. Continually surveying what is being used and communicating with whomever is using those products keeps the company running faster and smarter.
Proper research coupled with adequate information you will not be tasked to get more quotations and you can market information to back up your decision. You will achieve much needed agility.
Move Forward with Technology
Digitizing processes is one of the fastest ways to increase efficiency and be successful. Moving contracts and documents to the Cloud is essential for speeding up processes and becoming a forward-thinking company. Having an automated contract lifecycle management platform in place will help contract creation, real-time negotiations, faster signatures, and automated reminders to increase compliance.
With contracts being such a huge part of the purchase process, it’s important to ensure that a simple, comprehensive eProcurement system is in place both to create and review orders. This helps the process move smoothly once a decision is made to purchase, and makes it easy to review contracts and ensure all orders are up-to-date.
Build Virtuous Supplier Relationships
One of the main components of being a procurement professional is being surrounded by a group of trustworthy suppliers. Building and maintaining good supplier relationships streamlines the procurement process and eliminates the need to start from scratch on every bid request. Fair, detailed, and straightforward negotiations and RFPs increase efficiency and make suppliers happier.
Procurement outsourcing (PSPs)
Typically, between 20-35% of an average company's revenues are allocated to non-core purchases. This includes spend that is not a direct input or component of the final product/service being offered. This non-core spend can be very significant, however, it is often under-managed, compared to its “core-spend” (or direct material) counterpart, due to a number of challenges. These challenges include lack of focus on non-core spend categories, lack of standardized specifications, high fragmentation, and a high rate of non-compliance.
A Procurement Service Provider (PSP) can help companies mitigate these challenges by immediately leveraging an infrastructure that focuses on non-core spend and leverages category specific expertise, strategies and processes. They provide the muscle.
PSPs provide the much needed numbers hence saving on time. Current procurement activities must be documented, verified and benchmarked for cost and effectiveness. Once this data collection is complete, your team has a set of comparables to apply to the pro forma business cases of procurement service providers. A PSP have a long range view and hence invest in procurement technology to help capture and analyse spend data that is critical in procurement strategy and operations.
Saving opportunities through procurement outsourcing will include headcount reductions, inventory reductions, infrastructure cost reduction or elimination, employee training costs to enhance or maintain skills and cash flow.
Expand Your Network
It may seem easiest just to take charge of projects and not involve other teams, but working efficiently means involving key stakeholders. Input from other departments widens the perspective on good suppliers, quality, and pushes projects to completion faster. Building close relationships throughout an organization speeds up processes, builds trust, and increases efficiency.
With so many new tools for communication, involving other people is easier than ever before. Both internal and external parties will need access to any contracts that are created for orders, and having a platform in place that allows everyone to communicate in a single source will speed up the process and make sure all the right people are included.
Use Your Analytical Skills to Make the Right Decisions
Between project planning, vetting vendors and bids, and negotiating the best deals, being in procurement means having top-notch analytical skills. Having a full perspective on every part of the process keeps projects on track and finances in check. Choose procurement management platform with extensive analytics that will make gathering metrics and reporting back simple and effective.
Sharpen Your Negotiating Skills
Part of developing good relationships is negotiating well. Making a good deal for an organization while keeping suppliers happy can be a fine line to walk, but developing strategies to make both parties happy is vital to becoming efficient.
Negotiations always involve a contract, and in the past, this meant emailing or even mailing documents back and forth. This often muddled conversations and could lead to confusion as different people are involved on different email chains or conversations. Implementing a contract management module makes negotiation much simpler as everyone is now able to redline, edit, and comment in one place.
Today’s economy is global. Often the best deals in the business are in an unexpected location. Building relationships with global partners increases flexibility and options for an organization. Global supply chains often provide more options and better prices than limiting the search to close locations.
An important part of thinking globally is timing. An organization needs supplies as soon as possible, and suppliers want to get a deal signed as soon as possible. If teams are emailing documents back and forth and not all parties have immediate access, the process is significantly slowed down. A contract lifecycle management module ensures all the necessary parties have access as soon as the contract is created so that signatures happen faster.
In conclusion, for procurement leaders looking to act quickly and decisively, leveraging an experienced procurement service provider and procurement technology is a truly viable option.