Whether you’re a wholesale retailer, or multi-level logistics operation, you need to build a strong relationship with your suppliers through vendor management and auction strategies. How the manager helps lower costs and give greater ROI is fundamental to the business process. Today, his awareness about procurement SaaS and automation paired with the manager awareness about auction strategies is needed in industry 4.0. This post will cover technology’s role in how a good manager chooses the most cost-efficient procurement strategies.
Procurement savings can be made within the purchasing department in numerous ways using strategic sourcing of products. Every purchase manager that looks to fulfil their supply chain demands must aspire for reduced costs and effective vendor development while procuring resources. With the latest technology tools like a streamlined procure-to-pay process, e-procurement and e-billing have become more popular. A purchase manager can procure resources using data-driven auction strategies using the latest software for a higher ROI. The procurement process has become more people-centric as businesses scale up with effective vendor management for a greater ROI.
In this post, we will cover 10 ways to reduce the cost of procurement of resources. Let’s have a look!
Avoid rogue spending
Especially in larger procurement contracts, companies tend to splurge on the procurement process due to a lack of centralised procure-to-pay processes. By analysing the records of your purchases, you can figure out whether the procurement is way above the demand or cutting it short. Make sure you have an eway bill for every penny spent, especially GST.
E-procurement ensures that all this data is available every time you request a new shipment of goods.
Reviewing supplier terms
One of the most effective duties of a purchase manager is to ensure that the vendor’s development is based on favourable terms that can save your organisation money in the long run. One way of picking the right vendor is effective contract management, where you study the terms and discounts of your continued relationship with a vendor.
You can always opt for the vendor that offers the best terms at any point of the procurement cycle. That way, purchase managers are constantly updated and ready to return a high ROI.
Review stock replacement plans
Renewing contracts only when necessary is essential to maintain liquidity with your purchase management. Consider the cost of waiting for replacements, but opt only for essential procurement of resources that are used more frequently. As a purchase manager, you do not want to be held accountable for a build-up of unused buffer stock. An audit compilation should be done frequently to ensure that nothing is amiss and everything is accounted for.
Review stock continuously
A key practice for procurement savings and strategic sourcing is to review stocks continuously. Using the latest e-procurement software, you can get stock alerts and plan accordingly. Keeping yourself updated with the inventory movement is an essential part of reducing costs and contract management in the procurement process.
Emphasize management controls
Your supply chain may be long and winding, covering a large area and numerous products. However, as a purchase manager, your duty is to administer control in the efficiency of the supply chain through resource management. The extended responsibility is to ensure that a robust management control framework is in place to tackle every demand that may arise. Every aspect of the product movement, from procurement to delivery, should be accounted for in detail. That is how you garner a greater ROI.
Sometimes an auction strategy doesn’t pan out in favour of your procurement goals. This is where effective contract management and vendor development can avoid risks. The risk may be betting on the wrong vendors or renewing a contract without studying the terms. Either way, purchase managers are responsible for ensuring that the integrity of the procurement deal is based on data-driven insights.
Data-driven insights can reduce the risk threefold, simply because everybody in the deal is well-informed of the demand, supply, and risk.
The benefit of e-procurement tools like the advanced Procol engine is that all your data is centralised, allowing for a more efficient procurement process, contract management process, and auction strategy deployment. When your network of vendors is managed through a systematic interface, the errors are minimised, and a fruitful relationship emerges.
Revisit discount offers with suppliers
Part of every procure-to-pay process is to revisit discounts and urge that a continued relationship offers the many benefits of reduced costs. As a purchase manager, if you can bargain with a supplier for a marginal difference in the procurement process, you have succeeded at putting your customers first.
Reduced procurement costs result in competitive product pricing in the market. Everybody wants to save money: the greater your ROI, the greater your overall revenue.
Avoid duplication in purchases.
A purchase manager with experience in vendor management, e-billing, e-procurement, auction strategies, and high-revenue models can surely benefit from an intelligent system to weed out the excess. One effective way of saving costs on procurement is by avoiding duplicate brands, products, or contracts with the same company. In the long run, duplication can cost your company heavy sums of money.
To offer the best, your supply chain must be well-organised, and every product in the inventory is your business.
Educate & train your staff
A purchase manager is also a leader because they take on a lot of responsibility for the company assets by default. Ensuring that the staff involved in the procurement process are well educated and trained in the latest technologies can bring out the best results.
Luckily, the Procol interface is easy to learn and extremely advantageous for small, medium, and large-scale procurement operations and vendor management. It is important to utilise a technology that can bridge the gap between the time required to train and the time is taken to perform at optimum levels.
In 10 simple steps, you can make a winning e-procurement process that effortlessly satisfies the performance-driven supply chain. Get your Procol dashboard and begin the next generation of strategic sourcing. In the p2p cycle, the purchase manager should be the ultimate winner.
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