The Benefits of A Procurement Process and How to Attain Them

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All companies need to have a grasp on their spending and saving. Having a procurement process in place is essential for any organization. Regardless of the size of your company it will benefit from establishing a procurement process. A well-oiled process will yield more than just cost savings and efficiency – it can change a company completely.

Let’s look at the benefits of a procurement process and how to attain them for your company.

1) Create a thorough map of your company’s entire spending. Spending happens throughout the whole organization so don’t leave any stone unturned. With a map, the spending will be better understood and managed. Discover what your total spend is, who is spending and on what. Also, ask who the suppliers are and how often your company uses them. Continue asking questions and analyzing your spend. This will help you and your company plan, organize and save.

2) Encourage significant savings throughout the entire company. The procurement and purchasing team isn’t the only answer to savings. There are savings to be found in every corner of a company. But not everyone is as savvy with the savings, or vigilant. You must create spend-centered initiatives.
Spend-centered initiatives are just one part of the mix. The procurement team also needs to hold other departments accountable to those initiatives. By doing so, the savings shown from the various programs can be seen and analyzed. With this happening budgets can be created and set and hopefully lowered. A healthy organization will have detailed, accurate forecasting of their spending.

3) In order to have everyone in your company on board, they need to learn about savings. Educate all of your departments about savings and how to be more efficient purchasers. Ask your company if you are getting the best value? Are you aware of your volume requirements? Are you re-using and reducing? Are your wants and needs in check?

4) Make sure that contract management and supplier relationship management programs are enforced. Evaluate suppliers, don’t be completely focused on how quickly goods can be delivered. Recently a trend in supplier management is supplier risk assessment. The value of the suppliers and contracts is much higher than just a single focus. Ask what business practices your suppliers engage in. Anything worrisome? Knowing this is invaluable. If there is anything unacceptable this will reflect on your company as a purchaser. So being aware of your suppliers is important.

There will always be more initiatives created to help a company gain benefits from its procurement process. Discipline in savings will only ensure that organizations run more efficiently and save money.

Want to learn more about Procurement and how your business can benefit?
Download our free “Introduction to Procurement” Ebook! 

 

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