11 Ways to Boost Your Procurement Efficiency
Are you a Procurement Professional indulged in the purchasing of goods or services for your organization? If yes, then you might always be wishing to increase the efficiency of your procurement procedure.
It is in the legitimate concern of the organization that the sourcing of commodities is done at lower rates without compromising on the quality.
With the rapidly growing business environment, the demand for purchasing officers is also rising in every business sector. Boosting the efficiency of your procurement will result in cost savings to your organization.
Perhaps, the procurement manager shall apply straightforward attributes and strategies with a specific end goal to procure goods at lower rates.
Here are some of the tips we would recommend if you are looking for the solutions to boost your procurement efficiency.
1. Build better relationships with the Suppliers
It takes a lot of time while building and maintaining the relationships with the suppliers. An upbeat and satisfied supplier is itself an asset to the organization.
If you are familiar with the supplier for a long period of time, it will be easy for you to determine their negotiation pattern and supplier behavior. This makes it easy for you as a procurement professional to deal with him.
Although, there is always an option of on-boarding a new Vendor. But, this process is time-consuming and would require you to invest your resources.
Hence, you shall maintain the professionalism while dealing with the vendors, ensure that they are paid on time and often appreciate them for their skills and services.
2. Enhance your Network
Enhancing your network will give you an exposure to new ideas. Thus, you shall include and consult the stakeholders from other teams while taking a charge of any project. With their inputs, accomplishing the project will become simpler for you.
Apart from that, the good relationships you will form within the organization, plays a major role in building trust, giving a boost to efficiency and in a quick workflow.
Many Hands Make Light Work.
However, if there is no involvement from the other departments, then there is always an option of growing your network through blogging, LinkedIn, reading blogs and connecting with the people working and leading in your domain.
3. Think twice prior releasing the Purchase Requisition
Prior to releasing the Purchase Requisition, you shall confirm that whether there is a need for material/goods or note. You shall have a track record of the inventory available. Only after confirming the need, you shall release the PR.
4. Utilize your Analytical and Negotiation Skills
Managing the Vendors is an art of Procurement Officer. You are required to smoothly communicate with your suppliers regarding the quality, technical specifications, negotiations and delivery of the material to your premises.
Therefore, you shall enhance your problem solving, communication, analytical and negotiation skills in order to achieve maximum benefit for your organization.
In order to become a better procurement manager, you shall also understand and respect the supplier’s point of view. This would help you in Supplier Relationship Management (SRM) and Supplier Performance Management (SPM) over the time frame.
5. Keep an Eye on Global Market Trends
Often, there are circumstances when the rates of the material which you are acquiring increases in the market. The reasons for the increase in rates are dependent most of the times on global and sometimes on the local market trends.
Therefore, as a procurement professional, you must always have an eye on the global trends and shall acquire the redundant material when it’s cost in the market is low.
6. Regular Training and Development of your Team for increasing their efficiency
In order to gain the maximum output from your team, it is necessary to invest in them. Thus, you shall always train your team with the latest and ongoing innovations in the field. This would result in their knowledge enhancement.
Furthermore, the discussions and meetings at a consistent interim will make them straightforwardly recommend new thoughts and innovation they have come across.
7. Standardize and Centralize your Procurement
Standardizing your procurement procedure helps in the better management of the inventory. Apart from that, it will also be helpful in the proper management and utilization of the inventory available in the organization.
Whereas, centralizing the procurement will help in PR Aggregation. Because of the PR Aggregation, the quantity of materials to be acquired will increase. This will open up a scope for better negotiation expanded amount of material.
8. Focus on Total Acquisition Cost not on Price Cost
Often it happens that the procurement manager goes for the vendor which is offering the lowest rates. However, it is not the best deal always. There are various other costs involved while procuring the goods.
Some of these costs include Freight Value, Packaging Cost, Import Duty, Payment Terms and other Taxes. Thus, you shall consider all these values while purchasing a product.
9. Make a Plan for Primary and Secondary Sourcing
Always procuring from a specific material from a single vendor offers better rates. But, sometimes, it might happen that because of circumstances, the vendor isn’t able to deliver the material to you on time. In such cases, you shall be readily available with the database of the vendors who can supply material to you in urgency.
Another option is distributing the quantity, through the share of the business of a Quotation. Where the maximum quantity will go to the primary source and the remaining quantity will go to the secondary sources.
10. Reduce Your Expenses
Reducing the cost of procurement is a priority for all businesses. Below given are some tips we will suggest you for reducing your expenditure.
Get a complete overview of the Vendor’s Negotiation Pattern, Payment Terms and Delivery Period. It helps in the better negotiation and in determining the rating of a Vendor.
Make the process of Vendor On-boarding simpler, automated and quicker.
Establish a product information management (PIM) system for the transparency on the specifications of the products to the vendors.
Keep a track record of all the decisions, delivery details, vendor behavior in a simple database format. Keep in mind, the data quality matters the most!
11. Start thinking about up-grading your Procurement with E-Procurement
With the changing technology, now there are various P2P Software available which can monitor your procurement procedure right beginning from PR to Payment. Moreover, you are also having an option to customize these solutions as per your necessity.
With VENDX, you can evaluate the Vendor through Vendor Evaluation, calculate and monitor your spend through Spend Analysis. It also allows the Vendors and Buyers to communicate easily with each other through E-Mails and SMS. If there is any confusion while accessing the platform, you can always drop a message to our support team through live chat available on the platform.
VENDX is our one such solution, which you can customize in the following manners, depending on your requirement.
- VENDX Vendor Portal
- VENDX RFQ to Q+
- VENDX RFQ to Q+ and Technical Bid
- VENDX RFQ to Decision Authorization
- VENDX RFQ to Decision Authorization and Technical Bid
- VENDX Auction+
- VENDX Auction Services
- VENDX PR to PO
- VENDX Order to GRN
- VENDX PR to Payment
- VENDX PO to Payment
- VENDX Payment Register
Our solution is providing solutions to all of the queries as discussed above. Get in touch with us on email@example.com for knowing more. You can also contact us from here and request a demo from here.