Your procurement efficiency relates to how your business’s purchase requisition process is handled. 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 that you can streamline even better than you're currently doing. 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 With Your Procurement Process
Getting rid of paper trails and taking your business process online, especially with procurement, is one of the best ways to improve procurement efficiency.
A centralized system collects all relevant data and centralize your procurement information for easy access when you need it. The improved organization that a system like this brings to your procurement strategy, will also introduce 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The outdated methodologies that are common in traditional procurement practices allow too much room for error because it is so easy for things to slip under the radar if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. You're also more likely to enjoy improved relationships with your suppliers. With digital procurement software, you can manage contracts with contract management tools, generate purchase orders, automate purchase requests, RFQs, rate suppliers, manage store supplier information, and communicate with stakeholders all in one place.
Rethink Your Vendor Management & Supplier Relationships
Supplier relationship management (SRM) 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 vendor information and compare potential suppliers so you can be sure you are using the best ones for your needs. These tools help you manage bid requests you get from potential new vendors. They also double as an automated contract lifecycle management platform to manage supplier contracts.
This makes it easier to negotiate mutually beneficial procurement contracts and terms. You can also gain valuable insights into supplier performance so that if they are not meeting specific criteria in regard to quality, cost, and time, you can easily source the things you need from a more reliable vendor.
Quality, vendor availability, and supplier lead time are three very important KPIs to monitor in strategic sourcing if you want to boost your procurement efficiency. To keep these metrics up, you need to ensure that your business is surrounded by a group of trustworthy suppliers.
Improve Your Transparency and Collaboration With Digital Procurement
This step is crucial in improving relationships with suppliers and nurturing a productive and reliable team internally.
Miscommunication and a lack of transparency between buyers and vendors ultimately end up wasting the time of both parties. Plugging this gap to keep your suppliers happy is one of the ways to boost the efficiency of purchasing processes. Ensure both parties are working towards a common goal by setting clear expectations and conducting regular performance reviews. This is one of the key ways to boost your procurement efficiency.
By using a procurement management solution to drive efficiency and transparency, manufacturing and shipping delays can be avoided, and your products and services can be delivered in a way that meets 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 and maximize efficiency for everyone. 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 in the sourcing process also helps to achieve effective results in the area of risk management because they mitigate the chance of fraud, maverick spending, unapproved purchases, and unpaid invoices all of which affects an organization's bottom line.
Manage your Inventory More Efficiently To Improve Procurement Efficiency
Managing your existing stock and your inventory intake is essential to controlling your spending and maintaining your company’s bottom line.
Inventory management is one of the aspects of business where process efficiency is key. You need to be able to plan efficiently to minimize wasteful spending. You also need to streamline your procurement process so you can effectively 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.