4 Procurement Tips to Build a Billion Dollar Company
If you are already a billion dollar company and reading this, you will agree when I say that large companies are very effective in deploying independent procurement solutions as they have the financial and human resources to do so. But for a midsize organization, dependence on an existing ERP stack that involves manual interventions to solve their procurement needs is daunting! A large multinational company has complex, global purchasing needs to manage, and its procurement group will typically have the strategy, budget, and necessary software to meet that challenge. Small and medium-sized businesses, however, need a lower volume of goods and services supplied to stakeholders and thus often lack procurement tips for their infrastructure, strategy, budget, and tools that larger organizations enjoy.
In addition to the above, nowadays more and more midsize companies are moving away from age-old tradition and adopting new age procurement solutions helping them save more money than ever! For you to convince your procurement head regarding a holistic and dedicated procurement suite, read the below procurement tips to gather from the four vital strategies that can be incorporate in your presentation to convince the boss.
Procurement Tip 1:
Control maverick spending is an important procurement tip for a smaller enterprise, to take advantage over larger organizations as it is easier for them to track maverick spending. However, this still remains a challenge if the revenue is over $500 million and the organization has multiple chains of commands. It is quite possible that a spender splurges $8000-$1000 without anyone noticing it as one such spending is just a drop in the ocean. Discovery is the toughest part. If one such spending happens once every week, assuming the sourcing requirement is high, imagine how much would be the loss once it is discovered! To avoid such mishaps, this procurement tip on strategic sourcing can go a long way in offering the most comprehensive, detailed, accurate, and consistent spend visibility into your organization-wide spend.
Procurement Tip 2:
Don’t fall for false promises – This procurement tip may sound simple but this is the most complex part of purchasing. If you don’t give enough time and haven’t thought through who should be your vendor, you may end up spending more money than intended or saving less than you could. Many a time, a vendor may promise you the lowest cost but later you realize there are multiple hidden overheads not highlighted in the contract. To save you from being cheated, a strategic sourcing platform helps analyze all your suppliers’ overall performance in the past, set performance benchmarks, forecast savings, and suggest the best performing supplier thereby facilitating decision making and risk-avoidance. Use this procurement tip to your advantage.
Procurement Tip 3:
Get access to all suppliers – Here’s the third procurement tip for you if you are facing constant pressure of buying from local suppliers! If that’s the situation, here are the major questions you got to ask::
- Will my company benefit from buying locally?
- Is a global player offering me more benefit at a lesser cost?
- How will I judge the quality of goods supplied by the local player?
Having access to a variety of suppliers is the key to savings. Thanks to procurement solution providers with existing reliable supplier database, small and medium-sized enterprises can freely get in touch with local suppliers, analyze their past performance, benchmark them against global suppliers and finally make a reliably sound decision.
Procurement Tip 4:
Have a 360° view – It is hard to see your friend lost under stacks of contracts that require manual checking. And later learning about a termination citing incompency for unable to hold accountability! I am aware of many such procurement leaders who face challenges in streamlining all contracts and documents. So, if this is your trouble too, leverage this fourth procurement tip and deploy a procurement suite which will not only build, track, and store all contracts but also give you a 360° view of your entire purchasing cycle.
Whether it’s a large organization or a midsize company, a sound procurement and supply management strategy is extremely crucial to the overall success of the organization. Depending on the size of the company, the strategy may be different, but it can work just as effectively as another should the above procurements tips be considered. There is no ‘one size fits all’ strategy that will work; so don’t get caught up in a packaged, “ultimate procurement/sourcing” tool being offered up as a “magic bullet.” Instead with the above procurement tips in mind, opt for a provider who can offer you a customized solution based on your company’s need of the hour. For SMEs, every small purchase is meaningful. Common sense and open, honest communication are still the most practical considerations for the small to medium size company. And therefore, a sound procurement and supply management strategy is extremely important for the overall success of the organization.