Doing what you’ve always done is no longer acceptable in business. There are always a set of best practices that can be employed to maintain business excellence and improve productivity. The same is applicable for a companies’ procurement process as well. Companies need to follow procurement best practices to increase their revenues by being cost-effective.
Many government and commercial organizations have started recognizing procurement as a fundamental enabler of business strategy. It is a viable source of opportunity for process simplification and also provides detailed insights into operations through data and information. Therefore, organizations should focus on enforcing procurement best practices benchmarks that can enable them to realize the full potential that procurement can deliver.
At SpendEdge, we understand the impact that a procurement process can have on business. Therefore, in this blog, we have listed out procurement best practices that will ensure supply chain excellence for companies.
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Procurement best practices adopted by companies
Digital procurement strategy is not just limited to creating an online shopping cart or optimizing the website. It incorporates data from numerous sources such as sensors in warehouses and social media and enables companies to create an approach that can address the needs of the audience. Therefore, businesses should adopt digital procurement solutions and strategies and try to reduce waste and unneeded inventory costs. This is one of the procurement best practices that companies can follow and increase their process efficiencies.
Centralized supply management
A centralized supply management system enables companies to make purchasing and sourcing decisions based on the information and data received from the various departments and experts in an organization. This helps companies to mitigate risks associated with unmanaged direct spend and is considered as one of the procurement best practices by experts. Moreover, such procurement practices ensure the prevention of unnecessary spending with unapproved suppliers.
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Improve total cost of ownership
Strategic sourcing empowers companies to not just examine the purchase price, but also examine the total cost of owning or consuming a product or service. Even best-in-class companies have stopped selecting suppliers merely on the basis of price. They analyze the complete procurement process and then implement procurement best practices that can reduce the total cost of ownership.
Strengthen supplier relationship
Companies today are focusing on “supplier relationship management.” They are adopting various alliance management programs that can provide them a mechanism to strengthen their relationship with suppliers. They are even creating platforms for problem resolution and developing continuous improvement goals to achieve value for both parties.
Optimizing inventory becomes extremely crucial for companies during the economic downturn. Putting inventory on the radar help financial officers to find new ways to improve the bottom line and reduce working capital. Therefore, supply chain organizations are advised to review their inventory quantities and adopt procurement best practices.