Spot buys can be defined as the process of buying products and services to meet immediate requirements, rather than meeting the future demand. In the current procurement landscape, increasing pressure on cost reduction and sustained savings through purchasing are compelling organizations to streamline their internal processes. Despite the growing success, organizations are finding it difficult to unearth new sources of savings. This is where the practice of spot buys comes into the picture. In a corporate environment, spot buys include one or more characteristics such as one- time buys, low-dollar-value, and unmanaged category buys.
In many manufacturing industries, suppliers make long-term purchasing contracts without even understanding end-users’ demand. When the price of the commodity starts falling, spot buying can help businesses minimize the total expenditure. In simple words, the advantages of spot buying can be considered as a more ad-hoc and agile, and yet managed approach to buy products and services. While companies continue to drive profitability, organizations have a mature strategic-sourcing process in place, which can help companies to focus on the most valuable categories of spend.
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How do spot buys work?
For most companies’ spot buys are under- managed where the sellers get improper requests for a quote. The functioning of spot buys can happen through online business networks, where buyers can describe their needs and get automatically notified about the opportunities. Moreover, prominent sellers can submit their bids through a streamlined response mechanism.
What are the advantages of spot buying for buyers and sellers?
Spot buys offer untapped opportunities for savings among procurement organizations in areas such as sourcing, compliance, and supplier risk management. Through an online business network, the buyers can procure the right products and services at a competitive price. It is the most economical, fast, and easiest way to better match their products with the sellers; thereby, delivering significant saving opportunities. While sellers, on the other hand, can have access to lucrative opportunities to sell their products at a “spotlight”, they can also showcase their capabilities by offering products and services at an immediate scale.
Here are Some Tips for Achieving Cost Savings through Spot Buys
Multiple to single
Instead of negotiating separately for an individual purchase order, organizations should consider the list of purchase orders under a single negotiation. Organizations should also develop a standard discount-from-list to create higher monetary value through one big deal.
Even though an organization plans to buy a big deal, it still needs quotes from multiple suppliers. As the intensity of the competition among the supplier increases, the buyers can
find new sources that can help the business decrease cost and improve the overall performance.
Rebates play a vital role in maintaining close ties with a smaller set of suppliers. As organizations seek an annual volume rebate, they can set a threshold on spend targets. In simple words, if the suppliers sell more, the organization saves more on their annual spending.
Spend analysis assists a prominent non-alcoholic beverages producer identify potential saving opportunities.
Challenge: The client, a prominent non-alcoholic beverages producer, wanted to streamline and identify their spending behaviour to meet their procurement objectives. The client wanted to gain accurate, consistent, and detailed visibility into the spending patterns and improve data quality to reduce additional maverick spend.
Benefits offered: The solution offered helped the non-alcoholic beverages producer develop state-of-the-art tools to gain a more comprehensive analysis of the spend. The client was able to identify the latest saving opportunities in the supply chain and generate accurate and actionable insights on spend patterns.
Developing a competitive procurement process is crucial for companies to develop effective strategies. Stay ahead by requesting service on our procurement platform to gain the latest insights into procurement risks.
SpendEdge shares your passion for driving sourcing and procurement excellence. We act as a global strategic partner for leading Fortune 500 firms and other leading companies across industries. Our strength lies in delivering robust, real-time procurement market intelligence solutions that help sourcing and procurement professionals make informed decisions. Our innovative procurement solutions also help enterprises transform structural capabilities, improve execution efficiency, and fast-track time to savings. Every business needs smart procurement intelligence to stay at the top of their game; we provide actionable insights utilizing lean methodology to help enterprises make better purchasing decisions. We offer businesses with the precise combination of resources, tools, and techniques to help them redefine sourcing and procurement capabilities. We cover a broad spectrum of industries starting from pharmaceutical and life sciences to transportation with expertise in supply market intelligence, spend analysis and benchmarking supply chain risk assessment, and category management.