Today, procurement plays a crucial role for many organizations because of the key influence it has on the overall costs of the business. The primary objective of a successful procurement organization is something beyond the conventional belief of obtaining goods with response to internal requirements. Most organizations have optimized the entire process to produce important business value.
However, many procurement professionals are busy juggling with various projects, communicating across teams, and purchasing goods and services. So, in that case, there are several ways to enhance the efficiency of your procurement process that will also result in cost savings for your organization.
Here are some major tips on how to enhance procurement performance.
- a) Build Strong Relationship with Your Vendors
Procurement leaders should aim to build a strong relationship with their business vendors. This includes building trust and establishing proper communication to ensure that both parties are on the same page and share similar objectives and plans of action.
Along with examining vendor contracts on a daily basis to ensure compliance and performance from suppliers, procurement leaders should also search for ways to enhance relationship with them. Simply asking what they can do better or how they can serve customers better can be extremely helpful.
- b) Minimize Expenses
Cost reduction, effectiveness, and spend analytics still remain major business priorities in procurement. According to a study done by Deloitte in the year 2016, Chief Procurement Officers have witnessed almost 74 percent of cost reduction. Supply chain is the key necessity to minimize expenses successfully and enhance ROI. Connected and transparent data is needed in order to fuel the procurement, supply chain, and operations for achieving a 360 degree view on the products and services. So, based on the view, businesses can take quick decisions and search for new ways to minimize expenses to a great extent.
When contracts play a critical part of the entire purchase process, it is significant to ensure that a comprehensive procurement tracking system is in place to generate and evaluate orders. This will in turn make the procurement process easy to examine contracts and ensure that all orders are updated.
1.c) Integrating a Contract Management System
We all must admit that creating contracts is very hard and a time consuming task and businesses have to work with numerous suppliers each year. So, integrating contract management software will ease the entire work of creating new contracts each time you are on-boarding a new vendor. It will also aid you to understand which contract is reusable for the upcoming year thus enabling you to generate standard contract templates requiring small updates when used.
1.d) Boost Employee Effectiveness with Adequate Training and Development
In order to lead a successful enterprise, training and development is a major aspect. So, if you want to receive the maximum output from your department, it is essential for you to invest in them. You must keep on training your department with the ongoing and latest innovations in the market resulting in knowledge development.
Moreover, proper and to-the-point short term discussions will make them straightforward and they can share their thoughts and innovations that they have come across.
- e) Use Your Negotiating Skills
Negotiation is an integral part of building strong relationship. Making a fine deal for a company by keeping vendors satisfied can be a smooth line to walk through. But at the same time, building strategies to satisfy both the parties is important in order to become effective.
Earlier, negotiations were done through emails that often led to confusion as people got involved in different email loops or conversations. Integrating an effective contract management platform helps in making negotiations much easier as others are able to edit and comment in a single place.
- f) Benefits of Outsourcing Opportunities
Outsourcing procurement operation can enhance productivity and value internal employees by handing over the work that could be done very quickly and efficiently by a third party. According to a survey done by Deloitte, Chief Procurement Officers (CPO’s) are looking for ways to enhance outsourcing for operational purchasing and 12% plan to do that for category management and strategic sourcing.
Taking the help from a consultant can lead to long term return on investment (ROI) for organizations as the experts provide a knowledgeable and unbiased perspective on changes that are used to develop the bottom line.
- g) Build Strong Risk Management Policies
There can be a wide array of disruptions which includes system failures, security violations, and many unforeseen events that can impact business procedures to a great extent. So, procurement leaders have to prepare and fight against such kind of disruptions. They need to plan during an emergency and hand over the tasks to responsible parties that will help to ensure business continuity.
So, it is important to ensure that all the members involved throughout the company are informed properly on the risk management policies.
- h) Make The Right Decisions with Your Analytical Skills
In between negotiating the best possible deals, planning projects, and vetting suppliers, being in procurement also means having strong analytical skills. By having a complete idea on every part of the procurement process helps in keeping finances in check and projects on track. Today, many contract management platforms have wide-ranging analytics which will help in collecting metrics and reporting easy and efficient.
To Sum Up
Keeping your team updated with the latest trends and continuously modifying the processes may feel like a huge effort. But such kind of implementations will lead to significant enhancements in your company’s procurement performance. Selecting an automated procurement platform such as SutiProcure is the basic key to improve the procurement procedure.