With continuing economic challenges, there has never been more pressure on organisations (including public sector bodies) to seek cost savings in their procurement process. While some organisations are ahead of the curve with how they procure products and services, too many still use complex processes that lack structure and prevent the significant cost savings which can be achieved.
There are numerous opportunities for cost savings by moving to smarter procurement. The following tips will help organisations to unlock the hidden savings from their procurement processes.
1. Negotiate better prices
Savings can be achieved by using technology to guide employees to the best deals that have been negotiated on their behalf. Advanced’s partner, Science Warehouse, helps organisations to maximise the savings delivered through supplier contracts. Employees can use its eCatalogue to buy products and services from pre-agreed suppliers, ensuring that the best value from negotiated contracts is achieved. Rationalising suppliers into a selection of preferred or strategic suppliers also facilitates return spending, allowing buyers to negotiate the very best prices.
2. Use technology to control sourcing costs
To give employees the opportunity to effectively control sourcing costs, businesses need the right tools. There are procurement solutions that can cover the whole sourcing cycle from supplier identification to the publishing of tender notices, ensuring companies are buying as cost-effectively as possible.
3. Reduce costly and time-consuming administration
While most firms have moved towards electronic procurement, many still choose to manage and circulate paper procurement documents. eProcurement is all about automating previously manual processes to save the central buying team from having to re-key the same information over and over again. Document management solutions, such as cloud invoicing, can offer a supplier-friendly way to send and receive electronic invoices, increasing efficiencies and standardising the process.
4. Consolidate similar orders
Ad-hoc purchasing is never the best way to buy goods as prices can vary, depending on who is buying from where. Organisations that move away from this approach and consolidate similar orders, can start to achieve better pricing. Using eProcurement technology, it can be ensured that single orders of similar items are procured at the same time.
5. Create specialists to manage categories
Organisations should recognise that not all staff are buying experts. To improve category management, get specialists within each category to purchase on behalf of the organisation. eProcurement can then be used to route requisitions to these specialist category buyers, enabling the procurement of the right products and services at the right prices.
Some organisations are saving many thousands of pounds by procuring more intelligently. For instance, Countess of Chester Hospital NHS Foundation Trust and University College London (UCL) are reaping the rewards of smarter procurement, saving £5.23 million and £2 million respectively. With such significant savings to be achieved, no organisation can afford to turn a blind eye to improved procurement processes, especially during a time of severe economic austerity.