Ensuring efficiency in your procurement process has a positive chain reaction within your entire organization. The objectives of a world-class procurement organization are far beyond the traditional belief that procurement’s primary role is to obtain goods and services in response to internal needs. In fact, a successful procurement process aims to optimize the whole process to create significant business value.
There are various ways to improve the procurement process; some are minor changes that focus on improving part of the process such as creating essential internal documentation. Other major changes can go as far as transforming the entire process. Here are some examples of ways to improve the procurement process which adds value to an organization:
1. Implementing a contract management system
Make use of technology to save time and be more efficient by implementing a contract management system. Let’s admit it: creating contracts is time consuming and businesses often work with hundreds of vendors every year. Using a contract management system will alleviate the whole task of creating new contracts every time you onboard a new supplier. It will help you understand which contract can be reused from one supplier to the next. This will allow you to create standard contract templates which will require only minor updates each time they are used.
2. Increasing employee capability through training and development
Training and development remains one of the key factors that lead to a successful business. It benefits not only the employees’ personal growth but also impacts on the organizations’ productivity and profitability. It enables an organization to gain or maintain a competitive edge and leads to higher employee satisfaction, lower costs, and faster growth. The emergence of innovative training solutions is increasingly being adopted by leading procurement organizations. For instance: high-impact eLearning solutions combined with simulations where employees can apply what they are learning in their jobs. As a form of effective communication, training can lead to an increase in productivity and allow employees to make the best decisions for the company’s progress.
3. Maintain good supplier relationships
A procurement professional needs to be surrounded by a group of happy and qualified suppliers. Of course, a bid request can be put out to new vendors whenever you need a product and service, but those bids will take a huge amount of time to finalize. Having to start over every time you need to issue a bid request involves a long process of researching each new supplier, learning about their industry position and identifying their negotiation tactics. To prevent this from happening, it’s easier to simply maintain a good relationship with a group of suppliers you can trust. Streamlining the procurement in this way will make your job more efficient. Besides, it might also increase your goodwill as a happy supplier might tell others how good you are to work with which might lead to new sourcing avenues. All you need to do is: be fair with the suppliers in your business dealings, ensure that they are paid on time, put out detailed and straightforward RFPs and appreciate their skills.
4. Reduce expenses
One of the most appreciated qualities of procurement professionals is the ability to reduce costs while procuring the items a company need. But the one question which comes to the mind is exactly how? The key is to think carefully before making a purchase. It sounds easy but any procurement professional will understand this point since it can be easy to be tempted to create purchase orders for every request that comes at their desk – and this leads to unnecessary expenses! Take the time to identify, research, acquire and manage the products and services you company rely on and you will be more adept at reducing expenses considerably.
5. Using analytical and negotiation skills
As a procurement professional, juggling between planning and executing projects, dealing with multiple vendors, and negotiating the best deals, it goes without saying that you have some great analytical skills. To make the most of these skills, they should be applied to more than one area in the process. For example, an in-depth understanding of quantitative data is essential to make the best financial decision for your company. A procurement professional needs to walk on fine line as far negotiation is concerned. The struggle is between making the best deal for the company and at the same time makes sure that a good relationship is established with the suppliers. A good way to sharpen your negotiation skills is through advanced simulations and training.
An effective procurement process will improve an organization’s bottom line and increase efficiency and profitability – adding significant value to your organization. Of course, making changes can seem daunting at first but in the long run, they prove to be beneficial in multiple ways.