Buying and doing business is gradually becoming an expensive affair. Companies have begun to consider procurement management a major portion of their business as a whole. Because many companies still retain a manual procurement methodology, renovation is critical to stay abreast of business demands.
Today, it has become necessary for organizations to engage in an effective procure-to-pay process while making the best use of available technology solutions. At the same time, simply revamping the existing process and implementing the best available technology won’t necessarily improve procurement.
There is no one answer for this, for it could vary for every organization. However, there are certain procurement best practices that have worked well for many suppliers. These help reduce costs, improve process efficiency, and positively impact the cost-to-revenue ratio.
To create a procurement environment that is future-shock-proof, it is critical to go digital and use cloud-based procurement tools. Digital solutions reduce recurring operational labor and allow for more focus on strategy. High-performing organizations around the world are already leading the race of digital procurement practices.
To understand what suppliers can achieve through a competent digital procurement solution, let’s take a look at the following tools:
Transparency in procurement functions can unlock considerable potential savings and achieve operational excellence without hurdles. Spending transparency can ensure more accountability and minimize fraudulent activity during procurement.
Suppliers seeking to implement spending transparency during procurement should:
By making use of data analytics and automation, organizations can do away with the risk of dark purchasing or eccentric spending.
Every organization works with suppliers for essential materials, specialty services, regular maintenance, and one-time tasks such as repairs. Though it doesn’t seem too complex to call a vendor for an item or service, the process to select the best person or agency for the task isn’t that simple.
Identifying the best supplier, on-boarding, availing service, invoicing, and issuing payment can take several hours. Supplier management tools help deal with these tasks better and enhance engagement. Procurement technology for these tasks includes:
In general, an organization can enhance its supplier engagement by:
Profit margins never stay constant. Organizations that witness a slump in their profits often look for ways to control their spending and get back on track as soon as possible. Focusing on the procurement process can help profitability. In this vein, procurement teams must track their current inventory.
The actual cost of maintaining inventory can go beyond the cost of procuring it. If omitted, consumable products and even slow-moving consumable goods like clothing or electronics can expire. Poor planning and not predicting usage lead to such situations.
All of these losses are avoidable by using data-driven insights, such as:
While procurement teams focus on savings during the sourcing stage itself, an organized contract management process can provide more value. One way to organize processes is to employ contract lifecycle management software (CLM).
Without such tools, procurement teams may suffer from such issues as:
Transferring the contract management process to the cloud can help curtail these issues, thus centralizing data, leveraging spending, and reducing costs.
Automating contract management can help organizations:
The benefits of a procurement process are:
A smooth procurement process benefits the whole organization for suppliers. By utilizing these five best practices in procurement, suppliers can oil their supply chain, increase their productivity, and reduce impacts on their bottom line.
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Retail Intelligence – Walmart Replenishment
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