Many organizations focus on cost-savings and optimizing their budgets. Though other organizational departments can help achieve this goal, procurement department plays a vital role when it comes to cost-savings. Many organizations fail to achieve this is because they do not practice the constant monitoring process for procurement. Here are a few tips on how to procurement can contribute towards achieving the objective:
- Create a Spending Map: Company faces a bigger challenge of spending a huge amount on procurement. Therefore, organizations should invest in analyzing their past-procurement and build a spending map for every quarter, which helps in identifying new opportunities from finding a supplier to finalizing the supplier, from placing of the order to packaging, from delivery to installation, from maintenance to disposal of the procurement. The spend map is essential as it helps in overcoming procurement risks, improving a buyer-supplier relationship and also provides a foundation for cost reduction.
- Monitoring Spend: It is important for organization’s to be aware of their procurement spends. With latest procurement systems, it has become a simple process for procurement team to understand the expenditure and control it at regular intervals. Constantly monitoring the spend helps in identifying room for new products that can help in achieving the cost-reduction goal of the organization. Generate weekly or fortnight reports to ensure the spending capacity for every department and understand what kind of procurement is much needed in the organization.
- Procured Items: Every company deals with a range of products that need to be procured consistently. From administrative supplies to the production of raw materials, companies deal with two major procurement channels. Therefore companies need to maintain a quality check on the type of products purchased and balance it with the budget allocated. Many companies do not regularize this and due to which they experience an imbalance in the procured items and budgets spent.
- Supplier-Coordination: When it comes to procurement, companies deal with multiple suppliers to procure their organization’s requirement. It is important for companies to manage their supplier’s database thoroughly and know about what product they procure from the suppliers. At the same time procurement team should also know who uses their procured items the most. Having a clear analysis of internal and external procurement usage will help in forecasting future requirement with cost-reductions.
- Number of Transactions: 50% of companies are not aware of the number of times they place procurement orders to suppliers. To avoid the lack of understanding, generate time-based or regular procurement deliveries that can help the procurement team work efficiently and systematically. Also, have a know-how of the procurement transaction on a time to time basis.
To overcome the challenge of the low standard of procurements in your organizations, ensure procurement is monitored regularly to achieve your organization’s biggest challenge of cost-savings. Forecasting the market trends and planning a procurement plan can help companies work effectively and deliver efficiently.