Five procurement strategies for profitability

Purchasingb2b November/December 2011 print edition
Tough economic times have had an effect on all businesses, prompting many to cut costs. Procurement managers have looked for answers to challenges like doing more with fewer resources and maintaining or finding new suppliers. But a new whitepaper from Puridiom argues there are still opportunities to leverage profitability. The organization has compiled five strategies to help procurement professionals weather challenging times.
Utilize existing resources – Organizations with an e-procurement solution in place should ensure they understand and utilize all its capabilities, and that all users are trained to take advantage of these capabilities.
Identify cost cutting strategies and drive savings – Communication with other departments and managers is key to properly identifying cost cutting strategies, the paper says. Once cost cuts are defined and identified, companies can put the appropriate spend and visibility controls in place.
Ensure contract compliance – Identify contracts and ensure that contract pricing is maintained. Many solutions offer contract management. Organizations that have this option should utilize it, or manually keep on top of contract pricing.
Re-negotiate existing contracts and source new contracts – Many suppliers are experiencing the same financial difficulties as buyers, so the whitepaper advises re-negotiating existing contracts to obtain more favorable pricing or discounts. Working together with suppliers improves communication and collaboration and mitigates risk.

Maintain and find strategic suppliers to positively impact revenue and  production
– Organizations should take a close look at critical suppliers and pre-qualify additional suppliers, so if a back up is needed, it’s there. It’s critical for organizations to establish strategic supplier relationships and choose suppliers that positively impact revenue, production and reputation. Establishing or maintaining these strategic suppliers will be just as important when the economy improves, the whitepaper notes, since buyers will want to keep lower prices and maintain quality.
Implementing these five strategies are some of the ways organizations can take a pro-active approach to meeting today’s economic challenges, the whitepaper says.     b2b