Procurement Tips for 2012
Staff contributor: Emily Butcher
Increasingly, the power of purchasing cannot be underrated, and successful supply chain management is dependent upon successful procurement strategies. Short-term and long-term success in the sector is a culmination of steps and practices -- adopting a flexible, organized approach from the bottom up helps to maximize revenue, improve efficiency, and encourage lasting buyer-supplier relationships.
Although seemingly obvious, it can be easy to overlook or think little of the integral components that go into the procurement process. From start to finish, these tips will help supply chain managers make the most of their procurement practices.
1) Do Your Homework
It goes without saying, but adequate preparation -- becoming well informed and knowledgeable on potential clients and the process as a whole -- lays the foundation for rational, thoughtful decisions and subsequent actions, leading to greater long-term rewards.
Taking the extra time to strategize ways to dispel, or even avoid altogether, potential hiccups can save money and time down the road. Resources should be allocated to circumvent these situations, not pick up the pieces after something goes wrong, creating a domino-like effect involving the entire supply chain.
Once again, gathering as much information as possible on the background of a company or supplier and being well versed in the agreed upon negotiations is a sure-fire way to maximize procurement capabilities.
Allotting time and personnel for adequate research naturally goes hand-in-hand with being well organized. Everyone involved in purchasing – executive level, marketing, and sales – should be confident in their organizational and time management skills, and prioritizing capabilities. Coming to the table with a clear head and effectively managing stress to avoid burnout, a sneaky adversary in our breakneck-speed working lives, leads to increased productivity.
2) Work Together
Beginning with the initial information-gathering process, marketing teams can be utilized to help dispel the workload and are oftentimes better acquainted with the needs and wants of potential clients. Take advantage of the marketing department’s ability to work as a bridge between internal clients; cultivate a good relationship between purchasing and marketing.
Whenever possible, utilize in-office resources and make sure employees are sufficiently educated on the supply chain and procurement processes. Within the company, check that new purchasers are well trained and not dependent on an external cost consultant. These steps may take more time up front, but will ultimately make employees better buyers who are confident in their decisions.
As mentioned earlier, an obvious yet underestimated key ingredient of successful procurement is communication, both within the company and while interacting with clients. Actively listen, ask questions if things are unclear and always make sure everyone is on the same page. A solution can be as simple as circulating an e-mail detailing notes from an important meeting or discussion and asking for feedback from the client to avoid future misunderstandings or ambiguous goals; commitments should be thoroughly fleshed out and agreed upon.
3) Be Transparent
Effective communication also fosters transparency. Any procurement system needs to make accountability a central focus of their practices since the very process itself can lead to misuse of funds and in the worst cases, corruption.
Transparency not only acts to eradicate questionable business moves; both parties benefit from oversight which can help identify inefficiencies and increase procurement effectiveness. Communicate benefits and open discussions with clients. Answer questions, volunteer information and statistics before they are asked for.
By endorsing transparent practices, clients and purchasers work together towards the goal of successful purchasing -- ensuring a fair profit and satisfactory business relationship. An easy way to promote transparency is to highlight concrete numbers that reflect advantages of doing business with the company.
4) Talk Numbers
“Purchasing people love numbers,” says Tina Fegent, a marketing consultant who blogs on procurement tips. The most effective way to communicate benefits is to provide solid, tangible numbers to clients; mention KPI’s, ROI and SLA’s to translate how your business can help save time and resources, cut spending and increase revenue.
“Your efforts to improve your productivity will be wasted if you cannot show people the benefits you have achieved,” says Steve Carter, a procurement practitioner who offers tips for more effective practices, “so make sure you quantify the benefits by asking how you have made things faster, better or cheaper and then quantify the change.”
Marketing budgets are tight, so showing ways in which initial expenditure can pay off is important from the get go. Being upfront with this information reminds clients, as well as those within the company, of long-term investments and rewards.
Agencies should strive to proactively create and circulate reconciliation reports on a regular basis. Newsletters and case studies are an effective way to communicate these numbers and further solidify clients’ confidence in the company’s ability to deliver.
5) Strive for Improvement
In a fluid, changing economy, flexibility is needed to meet new challenges. Utilizing eProcurement, for example, can help companies analyze direct and indirect spending, while costing less than traditional methods.
Learning from past mistakes and treating each business interaction as an opportunity to learn and improve means companies are making the most of all their interactions and arrangements.
Start by looking at hard facts and numbers. Brainstorm ways to improve on the timeline and standard procedures; thinking outside the box -- perhaps enlisting a coworker to act as a procurement advocate to challenge tired procedures and encourage new ideas -- can exercise the ability to adapt and adopt creative solutions.
While learning from past experiences, companies should also make it a priority to focus on stability in the future – adopting long-term procurement projects instead of concentrating exclusively on short-term returns – to reduce cost uncertainties and fallout in volatile markets.