Procurement 101

4 Best Ways to Improve Your Procurement Efficiency

Reading time:

5 minute read

Written by

Logan Price

Your procurement efficiency relates to how your business’s procurement process is handled and as with all things in life, there is always room for improvement and growth. While procurement professionals have spent the past few years finding new ways to improve their processes, they cannot stop trying to improve.

If you look closer, you will always find processes that need adjustments. This is where your procurement efficiency comes in. You need to look at the Key Performance Indicators (KPIs) of your procurement management process and determine where any inefficiencies lie to secure your business’s success.

By improving on any inefficiencies in your business, no matter how small, you are improving cash flow, saving time, money, valuable resources, and manpower so it can be reutilized where you need it most.

Go Digital

Getting rid of paper trails and taking your business process online, especially with procurement, is one of the best ways to ensure efficiency.

A centralized system collects all relevant data information for easy access when you need it. The improved organization that a centralized system brings to your procurement strategy, will also bring a lot more transparency to your business when it comes to where your money is spent and measures you should be taking for cost savings.

The outdated methodologies that are common in traditional procurement practices allow too much room for error because it is so easy for things to slip under the radar if you have piles of unorganized papers.

By digitizing your procurement, you are less likely to misplace important documents like purchase orders, negotiations and invoices, and are more likely to have improved supplier relationships and professionalism. With digital procurement software, you can manage contracts with contract management tools, generate purchase orders, purchase requests, RFQs, rate suppliers, store supplier information, and communicate with stakeholders all in one place.

                     DOWNLOAD THE DIGITAL PROCUREMENT TRANSFORMATION GUIDE

Rethink your vendor management

Supplier relationship management is crucial to ensuring procurement runs smoothly.

You rely on your vendors to provide the goods and services you need for your business to function, but you need to be sure you are not just using the same supplier constantly because it is convenient. By doing this, you may be missing out on better quality goods and services or suppliers who can offer a better cost.

There are online procurement tools that can help you store your supplier information and compare potential suppliers so you can be sure you are using the best supplier for your needs. This makes it easier to negotiate mutually beneficial contracts and terms. You can also gain valuable insights into your supplier’s performance so that if they are not meeting specific criteria in regards to quality, cost, and time, you can easily replace them with a more reliable vendor.  Quality, vendor availability, and supplier lead time are three very important KPIs to monitor if you want to boost your procurement efficiency.

Improve your transparency and collaboration

This step is crucial in improving your supplier relationship and nurturing a productive and reliable team internally. Miscommunication and a lack of transparency between buyer and supplier ultimately end up wasting the time of both parties. Ensure both parties are working towards a common goal by setting clear expectations and conducting regular performance reviews.

As a result, manufacturing and shipping delays can be avoided, and your products and services can be delivered to your quality and time standards. When you are transparent and communicate effectively with your procurement team, they know exactly what they need to do and are therefore more productive because they feel empowered by their set role.

Using an e-procurement system with role-based user permissions is a great way to give each of your employees a set task. These systems usually also include instant messaging capabilities, real-time alerts when something needs approval or if there are issues, and role-based user permissions so that tasks and specific processes can only be accessed according to management levels in your company. Transparency and effective communication are also good for risk management because they mitigate the chance of fraud, unapproved purchases, and unpaid invoices.

Manage your Inventory More Efficiently

Managing your existing stock and your inventory intake is essential to controlling your spending and maintaining your company’s bottom line.

You need to be able to plan efficiently to minimize wasteful spending. You need to be able to keep track of your stock and when you may need to reorder.

Another important aspect of managing your inventory is building a solid distribution channel so you can easily track stock that is being moved between your different business locations.

Digital procurement platforms will allow your operations to run smoothly along your supply chain. You can control your inventory with checklists, reorder points, 2-way match, and 3-way match capabilities.

Procurement Transformation

Mailing List

Subscribe to have new content delivered directly to your inbox.

LET'S GET STARTED

Create a free account or request a live demo