Safe Choice or Better Choice in the Procurement Process?

CFOs and CPOs often have the choice of going with the name company (safe choice) or the entrepreneurial company (better choice). In procurement, there is risk in choosing the upstart if they don’t live up to the expectations. It takes courage to go with a lesser-known company even if it is clear that their service or product is better.
C-level executives that I speak with would love to describe their procurement system with words like: “nimble”, “flexible”, “time saver” and “bottom line enhancer”.
The words I am more likely to hear are: “cumbersome”, “complex” and “time sucker”. The biggest frustration is that the savings the system is supposed to be producing are frustratingly hard to prove.
Companies that offer a large suite of services will find it challenging to deliver high value in all areas. In many industries, nimble companies have spotted opportunities where they can take a slice of the pie and create a competitive advantage.
The car repair industry is a classic example. Tires, oil changes, mufflers, brakes and shocks are services that are delivered by specialty providers. These providers have been able to deliver higher value for these select services. High end car dealers realized that they were losing the profitable repair part of the business and now offer a host of amenities to get all of your repair work. Florists are typically small businesses that depend on local traffic. Larger grocery chains realized that there is tremendous profit in flowers and can leverage size to grab that business from smaller competitors.
Why is this important to CFOs and CPOs? If you aren’t sure if your purchasing and procurement systems are supporting your overriding goal to enhance the bottom line, consider these issues:

  • How efficient are your procurement and purchasing systems in all areas?
  • Do you have specific examples of time savings and productivity increases created through your systems?
  • Are there modules that are virtually ignored or rarely utilized?
  • Has your team created workarounds to avoid the cumbersome parts of the system?
  • Can your team seamlessly share sourcing event data and analysis across all profit centers?
  • What type of training is provided for each module in your systems?
  • Is the training provided in an interactive manner with questions and feedback?
  • What documentation of processes and procedures exists in centralized systems and how easily can it be accessed?
  • Does a centralized contract repository exist?
  • How do your systems support savings analysis?
  • What system features allow your organization to identify savings opportunities for the entire organization?
  • Could your organization benefit from systems that have created a better way to accomplish certain parts of the procurement process?

Getting better isn’t an option today, it is a requirement. Working with all-in-one systems could be the right choice for your organization but that would be surprising. Seeking out organizations that have found better ways to do things, even if they only serve one slice of the pie is smart business and a better choice.
Action Step: What would be a good next step if these issues sound familiar?
EC Sourcing Group is one of the companies I represent because they help procurement teams deliver quantifiable cost and time savings. 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.
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Until Next Time, I Wish You Great Success in Your Business and in Your Life
Mike Jeffries