To survive in today’s business climate, you’ve got to be ruthlessly efficient.
Managers do everything they can to make their operations leaner. Many move their clunky on-premise network to the cloud or find less expensive office space. They lower their shipping costs or implement a project management solution.
However, one oft-overlooked area is procurement. All businesses have procurement needs, and most pay more than they should. From coffee cups to toilet paper, your business may be missing out on opportunities to save.
To see if you could cut costs on procurement, take stock of your strategy by answering four questions. You’ll discover how lean your operation really is — and find some ways to leverage the power of a group purchasing organization.
1. How do you track your procurement?
In many organizations, procurement is barely tracked, let alone optimized. Someone notices the Keurig cups are low, so Sam in accounting orders more. A couple weeks later, the supply has dwindled again; another replenishment is needed. No one notices the accumulating costs until the end of the year.
There’s a more efficient way to manage these expenses. Using the power of analytics software and procurement companies can increase transparency. After all, you can’t save what you can’t see.
2. How much of your procurement is under management?
Who takes care of your procurement? Having a dedicated professional regularly analyzing these costs can make a big difference. A study found for every dollar spent under management, enterprises see a 6% to 12% benefit, on average. Putting more of your firm’s procurement under management generates significant benefits.
3. How’s your vendor performance?
Does your supplier process orders promptly, or are you left waiting on deliveries? When you contact your vendor, do you hear back immediately? Does it take days to get a response? How often are providers out of stock? Do the terms and prices fluctuate unpredictably? Does the quality of the products pass muster? What about the efficiency of the service?
Remember, vendor performance affects your bottom line. Waiting on back-ordered supplies, returning defective products, or experiencing communications lags doesn’t just eat up your patience. It eats up your profit margins, too.
4. How much does your procurement cost you?
World-class procurement corporations spend 21% less on business supplies, according to a Hackett Group survey. With those kinds of savings on the line, it pays to pay attention to procurement costs.
Industry titans can use their volume to negotiate discounted costs, but what about a business with a handful of employees? That’s where the power of group purchasing comes in. By working with a procurement solution company like Una, smaller operations can use collective buying power to access bulk discounts. Bringing down those costs can help margins.
Only the leanest operations can survive in this environment. A competitive procurement strategy can make the difference between struggling and thriving. Consider taking steps to tighten up your procurement. Refine your management processes. Evaluate your vendor performance. Better yet, leverage the collective buying power of a group purchasing organization.