Top 5 Ways to Optimize Your Procurement Strategy
There are a lot of moving parts in procurement, and it’s easy sometimes to keep following the same processes you always have because you are achieving moderate success. Change when it comes to procurement, sourcing, and supply chain management makes people nervous. Trying to learn new software or do things in a new way can be challenging, but the payoff—especially when we’re talking about ROI—can be well worth the learning curve.
There are some key things you should be doing to ensure your procurement strategy is working as efficiently as it should. Read on to learn how you can optimize your process.
1. Go Completely Digital when Optimizing Your Procurement Strategy
Nearly everyone has moved on to at least making most of their category management and procurement processes digital. Whether you’re using a full eProcurement suite, where you are using eTendering and signing into a procurement gateway. You also have it manage things such as your vendor database, eAuctions, spend analysis reports, contracts, and other parts of procurement, or you’re using different types of software for other processes.
Nothing you do should be manually entered or be done on paper or spreadsheets in this digital age. An important reason is you need integrated procurement technologies to thrive and drive efficiencies.
Collaborative and integrated procurement is a top procurement strategy that helps keep your team’s visibility on the same page. Trying to follow a paper trail or disparate spreadsheets or emails is the exact opposite of what you want.
2. Devote Extra Time to Vendor Management to Optimize Your Procurement Strategy
One of the top ways to optimize your procurement strategy is to foster good relationships with your vendors. They shouldn’t be complete strangers, and they shouldn’t be your social buddies, but you want good, working relationships with your suppliers.
On the same token, knowing when to cut ties is crucial. Having software that runs sourcing and contract management reports and links in supplier performance is vital because seeing this data together can help you come to conclusions you may not have otherwise. Maybe a vendor is consistently late.
Maybe one delivers goods of lower quality. In other words, maybe some vendors are adding too much risk to your supply chain. As you build an excellent vendor database, you’ll identify your strategic suppliers, which will also aid you in the strategic sourcing process.
3. Optimize Your Procurement Strategy by Thinking Globally
People can get easily divided on whether to use global sourcing, but procurement indicators often don’t lie. Try global suppliers, take a hard look at your KPIs, and then decide whether it was the right decision. There are typically myriad benefits from going global, and these may outweigh the risks.
As always, don’t sacrifice quality for quantity or quality for an expedited good—but many global markets deliver high-quality items, so don’t let that dissuade you from using global sourcing as a top procurement strategy.
4. Don’t Ignore Indirect Spend when Optimizing Your Procurement Strategy
You need to get a full picture of spend before you can truly see where you need to improve. To do this, you need all of the data, which means indirect procurement and indirect spend. Things such as the cleaning crew, overhead, other costs to maintain the building, and so forth all add to your budget.
Spend analysis not only helps you take a look at contracts and procurement but also at maverick spend and other looming problems. Most spend analysis solutions will help you view total indirect spend to determine which categories you should prioritize first from a sourcing perspective. You must be sure to collect data from all systems that have to spend to get an accurate picture of your indirect spend and potential sourcing ROI.
5. Hire the Right People to Optimize Your Procurement Strategy
Unfortunately or fortunately, your employees and vendors should be treated with the same considerations. This isn’t saying your employees are expendable, but if someone is a wrong fit, it’s a poor procurement strategy to keep that person on when it feels like they’re swimming against the current.
As we are still mid-COVID19 pandemic, everyone may be dispersed or unmotivated at times. It’s a great time to reach out via Teams, Slack or similar software to check-in. When everyone is on the same page and acts as a cohesive team, your procurement strategies will automatically become more efficient.
Luckily, a lot of procurement software does allow for high visibility and collaboration, so sometimes, this is enough to give a gentle push.
To learn more about how you can optimize your procurement strategy, or you’d like to hear about some of our services, contact EC Sourcing Group to schedule a discovery call and demo today by dialing 973-936-9672. We want to help you re-imagine procurement.