Your business needs supplies, and when it comes to getting the said supplies, you must acquire the right quality, at the right time, and, most essentially, at the right price. However, when working on multiple projects or with multiple suppliers, ensuring you get your supplies at the right negotiated price can be challenging.
The Difficulty of Juggling Individually Negotiated Price
Depending on how large your operation is, keeping track of the individually the negotiated price for supplies, material and equipment can quickly get out of hand. Why? Because you often spend more company resources on middle management, trying to keep everything above board.
Additionally, the approach makes it harder for you to attain cost-efficiency. How sure are you that you are getting the right price for each material and equipment? Ultimately, other areas of your business, such as productivity and even profit margins, end up paying the price.
In today’s fast-paced economic environment, optimal coordination is crucial. Without it, adaptability is made more difficult. The slower you are to adapt to your customers’ ever-changing needs, the more of an advantage you give your competition. The same goes for procurement, implementing a strategic approach enables you to attain not only coordination, but company efficiency and profitability.
How Approval Routing and Workflow can Ensure Your Procurement Teams Are Taking Full Advantage of the Negotiated Price to Identify Cost-Effective Suppliers
A complex supply chain results in multiple costs that add unnecessary strain to your company. Fortunately, there are steps you can take that will allow you to identify the most cost-effective suppliers and keep within corporate procurement policy compliance.
1. Streamline Your Procurement Process
Technology can easily be your best friend. Approval Routing software technology will allow you to perform operations more efficiently and in a short amount of time. A purchase management solution, for instance, consolidates your entire procurement process in one location and makes it easier for you to keep track of all your suppliers and the costs of every material and equipment they are supplying you with.
Another way technology can help is by providing you with real-time and accurate information. A purchase management solution system will keep track of the multiple supplier contracts you have, tracking your inventory, active and completed orders, and even give you a forecast of supplier performance based on past performance.
2. Change How You Buy
Altering your purchase approach mostly deals with changing your demand patterns, which can be done in three ways. The first way is by consolidating purchase orders to ensure one uniform rate with every material or equipment you procure. The other ways you can change demand patterns is by rethinking purchasing bundles and decreasing purchase volume.
You could also decrease the number of suppliers you negotiate with. Making your supplier pool smaller and more organized allows negotiating rates to run much more smoothly, allowing you to be more cost-efficient.
3. Centralize Procurement
Having multiple procurement teams can sometimes lead to purchase duplication. On the other hand, centralizing your procurement streamlines the entire process allowing you to formulate effective strategies for rationalizing your supplier base and reducing overall supply costs.
4. Review Existing Contracts
With the business world constantly changing, your company’s position today is not what it was two or three years ago. Reviewing supply contracts that were negotiated a few years back could create an opportunity for renegotiation, allowing you to get better supply rates from suppliers you’ve worked with for a long time. Carry out a cost-benefit analysis and cancel the contracts that are no longer feasible, finding new suppliers who can provide you with the rates and efficiency your procurement team desires.
It takes some doing but streamlining your procurement process and ensuring your teams are getting the right supplies at the right price does wonders for your business. Also, feel free to contact us to improve your procurement process.
About ISS Group
ISS Group has been providing IT Solutions and Services to the QAD User Community since 1995. Our primary focus is to deliver add-value Solutions exclusively to the QAD User Community which Improves the Flow and Control of QAD ERP related Business Processes.