Shouldn’t the eSourcing platform you utilize work seamlessly with all spend categories? Can it manage $25,000 purchases as easily as multi-million dollar events?
Many times this year I have been surprised by the answers to these questions.
Companies I have spoken with cover a wide range of industries.
The systems used include:
- Large complex platforms designed to cover all facets of the supply chain
- Specialized systems designed for segments like sourcing, spend analysis, auctions and vendor management
- In house programs and platforms developed to meet specialized industry or category needs
- Offline systems based on popular programs like Excel, Word, Google Docs and PDFs
There is one common theme that I noticed.
A significant amount of the annual spend did not go through the system.
A number of reasons were given to support this:
- Complex systems took too long to set up and manage for smaller events
- Specialized systems are really good at one thing or several things but required a lot of massaging to make them fit every situation
- In house programs are often outdated or unable to handle changing business needs
- Even popular programs aren’t used for smaller spend events or ones with frequently used suppliers because it seems more efficient to simply call or email
I have a strong financial background and my bias is toward controls.
Anything that is outside of a control environment is subject to error. Any information generated from a workaround will not be accessible for analysis or future use without a lot of effort.
Any purchase that is completed without using your system will not generate the financial savings or time efficiencies that it should.
The reverse is also true and can dramatically improve your bottom line.
If your organization could save just 3% or 10% of your purchases this will huge. For many spend categories savings of 15% or more are realistic and achievable.
In this Christmas season well known retailers are discounting 35% to generate sales and maintain market share.
This point should make you realize that there is a lot of savings that can be generated by creating competition.
Every company can strategically manage spend. It is most likely that the Pareto principal applies, so getting control of 20% of the items can yield tremendous benefits.
I am not suggesting that you only do the 20% but you need to start somewhere.
In evaluating your current system, look at the categories and services that it can’t seem to handle. Once you know this, you can estimate the potential savings.
The savings will support any investment needed in a new system or an upgrade to your current one.
In thinking about this subject today, I was looking at a list of spend categories that have been managed using an eSourcing platform. There are hundreds of primary categories in office supplies, manufacturing materials, chemicals, medical products, construction, services, leasing and so many more.
There are so many categories that you could attack.
Every success you generate will lead to greater successes and recognition.
Action Step: Finding the right system for your needs can seem like a challenging process but it doesn’t have to be. If you are uncertain where to start a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you need. If you want to go explore this topic in greater detail, please contact me.
EC Sourcing Group is one of the companies I represent because their tools have been created by dedicated and experienced sourcing professionals. They know the day-to-day challenges your team faces and have built their tools to solve them. If you want to know how, I invite you to request a demo or 30-minute discovery conversation so you can experience the platform, process, people, and tools. You can reach me at 973-936-9672.
Next week I will continue on this same theme so your organization can improve your bottom line.
If you would like to know more ways to reduce costs without changing the way you do business, simply give me a call or send me an email with your contact information and the best time to reach you.
You Won’t Drift to Success©
Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life