Procurement is one of the key decision-making areas for business, wonder why? The answer is because it directly impacts an organization’s profitability. Therefore, a cost-effective and optimum procurement strategy is important for the sustainability of business in the long run. So how exactly do you decide on a procurement strategy that suits your business? How do you measure the extent of its effectiveness to your business? What are the things to keep in mind while formulating an effective procurement strategy? Let’s discuss.
Intelligent Procurement Strategy: Go Digital
Procurement can be a complex process, but thanks to digitization and various digital procurement platforms and solutions, the procurement process is more simplified now. Digital procurement solutions cover the entire procure-to-pay value chain which enables an organization to collect huge amounts of data. This data supplemented by external data provides buyers all the information that they require for sourcing, managing and monitoring the supplier relationship from one end of the procurement value chain to another. However, to make optimum utilization of the enormous data processed with the help of digital procurement, the data must be measurable and should facilitate the procurement managers to analyze the data and draw the right conclusions to forms an optimum procurement strategy.
What Should an Effective Procurement Strategy Measure?
The main aim of procurement solutions is to help the purchasing department to obtain answers to some of the vital questions that are crucial in the company’s operation, in an intuitive and simple manner. So, what are the questions that the procurement department should keep in mind while formulating a procurement strategy?
- Can the compliance rate of contacts be tracked?
- How to check if the supplier has honored the terms of the contract
- What are the payment terms? Are there any benefits associated with early payment terms?
- Can the company’s data be benchmarked with the market?
Procurement Intelligence: Key to Business Agility
An intelligent procurement strategy and purchase decision give a company the ability to quickly act upon their market conditions and formulate effective business strategies. Systematic analysis of the plethora of data available through digital procurement can be used to formulate the right strategies and easily identify the gaps. Another key importance of digitalization of procurement intelligence to a business is that it gives valuable information on purchases to other departments. It is not just the finance department that benefits from this data, but it can also prove helpful for other departments such as R&D to make product modifications and also marketing and sales or marketing departments to undertake promotional activities.
