Supply Chain procurement efficiency is all about bidding adieu to unnecessary costs and operations and bringing on board a system that is transparent, collaborative, and induces cost savings. Here are 5 top ways to ensure best in the league procurement practices:
- Visibility on spend:
The first step to undertake is to have a clear view of how much the business is spending on procurements. It’s not always necessary that the business may deal with high value purchases. Business may spend a substantial amount of money in procuring low value goods and services. Management may simply choose to put a blind eye to these procurement binges, believing them to be too small a value to even be considered or taken seriously. But for all you know, these small but complex and indirect procurement activities can add up to a substantial amount. These activities present an opportunity for potential savings and increased efficiencies. It’s time that business sets up a tool that tracks all purchases and bills them in one place, and is simple enough to understand and access. This dashboard will help business managers to gain visibility on all procurement activities, big and small, at a local, national and global, and then they can take appropriate steps to cut down unnecessary costs.
- Increase savings:
Visibility on spend leads us to the next important question. How do we cut down on unnecessary spends that can take a toll on the financial health of the organization? Thanks to advanced technologies, organizations have at their disposal a number of platforms and tools that set up control. These systems have data fed in regarding the number of purchase requests that can be raised in a particular amount of time, or the maximum limit of money that can be spent on a purchase. The computer processes these inputs and only if the requests fall within the acceptance bracket, are these purchases approved. This kind of system drastically reduces maverick spending, reduces redundancy, increases efficiency and most importantly makes the entire procurement process more compliant and transparent.
- Automate operations:
In the procurement function, a lot many activities are repetitive and time consuming, making them ideal for automation. Also, when human labour is involved in carrying out such repetitive work, there is a chance of mistake occurring. By automating redundant work, you free up your resources and enable them to be available for more value adding tasks. Moreover, by computerizing the work, the margin for error is drastically reduced and so is the time taken to complete a certain set of tasks. This way, by automation, business can improve productivity, and eliminate errors and waste.
- Traditional supply chain: practices are based on carrying out processes manually. Such systems believe that supply chain consists of silos, unconnected functions. The truth is far from it. The efficiency of supply chain depends on how well the business understands that business success is connected to supply chain success and that supply chain isn’t disconnected but more of a network where transparency and collaboration are of prime importance. Hence in order to increase productivity, it is critical that business engages and connects all stakeholders of the business, right from suppliers to customers, and keeps them in the loop. The more ‘unsiloed’ the business is, the better collaboration and innovation opportunities the business has.
- The next point stems: for the last point that we just talked about. Traditional supply chains rely heavily on one single supplier, forcing them to compete in increasingly less rewarding environments. Collaboration among all stakeholders, external and internal is important, so is building a healthy relationship with your supplier/s. Traditional supply chains believe it is best to deal with only one supplier. But in this age of globalization, when businesses are expanding, dealing with one supplier is not possible, logistically and even monetarily. They need to foster a number of suppliers who can help them procure the very best in terms of time, quality, and money. Supply chain for high tech industry efficiency depends a lot on supplier management. Implement a good supplier management tool to enable effective supplier collaboration and sharing to ensure high savings and high efficiency.