Supplier Management Best Practices: An Easy Guide for Businesses

Business needs have changed a lot over the last few years, resulting in shorter product lifecycles and wider market swings. As a result, supplier collaboration has emerged as one of the top strategies to elevate the performance of businesses to the next level. Suppliers of today possess detailed insights into market changes and have their fingers on the pulse of innovation, which will prove beneficial in today’s hyperkinetic business environment. But to gain value from suppliers, businesses need to understand how to better manage suppliers. Below, you will find the supplier management best practices for 2019 and beyond.

Supplier management best practices #1: Segment suppliers effectively

Businesses usually segment their suppliers based on their impact on the supply chain and supply market complexity. They classify suppliers into strategic, bottleneck, leverage and routine suppliers which many a time may lead to poor return on investments (ROI). By incorporating a third parameter that can help measure the compatibility between the organization and the supplier, companies can better manage their suppliers and achieve set objectives. Also, this will help them to improve supplier relationship management, develop supplier-specific strategies, and improve collaborations with them.

Supplier management best practices #2: Develop a governance model

After segmenting suppliers, companies should develop a governance model that can track the relationship with suppliers from the beginning. This will provide clarity to businesses in understanding – who is in charge of managing the relationship with suppliers and when should a senior executive be involved? It requires resources from both buyer and supplier companies to ensure that the performance meets business objectives. In the case of strategic suppliers, the degree of governance will be more than transactional suppliers.

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Supplier Management Best Practices: An Easy Guide for Businesses

Procurement Best Practices that Companies Should Be Employing in 2019

Procurement Best Practices for Companies

Earlier, procurement had a simple mandate of keeping the cost low. But nowadays, procurement has become much more complex and requires a set of procurement best practices that can help companies to gain visibility into the operations through accurate data. Such practices improve procurement outcomes apart from identifying sustainable cost reduction opportunities and help companies to gain competitive advantage. Therefore, we have defined procurement best practices benchmarks set by leading organizations to increase productivity and profitability.

Procurement Best Practices #1: Online procurement

Merely optimizing the website doesn’t improve the organization’s procurement process. Having a digital procurement strategy that incorporates data from different sources such as sensors in warehouses, mobile technology and addresses the consumer needs is must. Online procurement creates a predictive approach and enables organizations to provide products and services according to demands, reducing waste and increasing efficiency of organizations.

Procurement Best Practices #2: Centralize supply management

A centralized supply management system utilizes information gained from various departments and makes purchasing and sourcing decisions based on that information. It mitigates the risks and threats associated with indirect spend and minimizes maverick spend occurring due to unapproved suppliers. Implementing such practices results in substantial returns for companies.

Procurement Best Practices #3: Develop a procurement spend map

Most organizations do not have a proper spend map and rely on poor quality information to understand spend at an organizational level. A spend map provides the basis for identifying opportunities and risks and helps companies to improve supplier value apart from implementing cost reduction initiatives. Mapping spend provides valuable insights into the total spend the company, improves transaction processes and monitors the administrative cost.

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Procurement Best Practices that Companies Should Be Employing in 2019

Analyzing Key Components of Category Management and Uplifting Sales Volume by Over 10% for an FMCG Company

Key Components of Category Management

Performance measurement
Strategy
Organizational Capabilities
Trading Partner Relationships
Business Process
Information Technology

The above-mentioned components of category management are considered vital, without which category management cannot be practiced. Out of the six components of category management, strategy and business process are core components. Rest four factors i.e., performance measurement, information technology, organizational capabilities, and co-operative trading partnerships enable the core components to achieve the company’s overall objectives. Category management business process lays a strong emphasis on how work is done within and between organizations. It creates a balance between product and process investments and helps businesses to reduce costs.

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Analyzing Key Components of Category Management and Uplifting Sales Volume by Over 10% for an FMCG Company

A Comprehensive Guide to Contract Management – Challenges, Benefits, Stages and Best Practices

In procurement, contract management consistently rates as one of the top three issues for procurement managers. It offers great potential for procurement teams to make a difference for their organization. Having the ability to improve the contract management process will result in numerous business benefits – especially for organizations with direct supply lines dependent on longer-term service based contracts. It may even be the new frontier for procurement – the new place to generate real value for companies.

Challenges in Contract Management

Challenge 1: Legal Review

Legal review often takes a lot of time and this is the reason why companies try to circumvent legal review in the contract management process. It becomes a challenge for companies to review a 20-page contract when it’s only a few paragraphs that need legal advice. If not explained properly, it would take for legal review and business partners may ignore it altogether.

Challenge 2: Negotiation Terms

Negotiations can be a challenge in the contract management process. Any miscommunication in the negotiation process can lead to delayed revenues, longer lead times, and a reduction in profit margins for both parties. In addition, extending negotiations can also result in missed opportunities for companies. Therefore, it becomes critical for both parties to track each other’s involvement in the contract management process to avoid unnecessary delays.

Challenge 3: Poor Governance

Poor governance is one of the common challenges faced by companies during contract management. Lack of resources within organizations to maintain and monitor terms and requirements of a contract increases possibilities of risks. Also, it inhibits the implementation of new technologies, and delays renewals for contracts.

Challenge 4: Boilerplate Language

Boilerplate language refers to the standardized language used in the contracts. Although it speeds up the contract management process, it needs reviewal on a regular basis to meet compliance requirements. These provisions are extremely important and help determine how disputes would be resolved in case of any conflicts. This compels companies to leverage contract management services and amend the boilerplate language.

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A Comprehensive Guide to Contract Management – Challenges, Benefits, Stages and Best Practices

Everything You Need to Know About Tail Spend Management

Optimizing the Procure to Pay Process and Achieving Savings of over $50,000 for an Oil and Gas Company

What is the Procure to Pay Process?

The procure to pay process is the coordinated action required for procuring goods and services in a timely and cost-effective manner. It involves steps such as requisitioning, purchasing, receiving, paying and accounting for goods and services in sequential order. Here are the key performance indicators vital for the procure to pay process.

Key Performance Indicators for the Procure to Pay Process

Quality

Companies need to have clear set norms mentioned in the contract with penalties to decrease the percentage of substandard products and improve compliance. For this, companies can measure the defect rate of products and rate their suppliers accordingly.

Delivery

Companies can track the average time taken by a supplier to fulfill a certain order and calculate supplier lead time. Additionally, they can also determine purchase order cycle time and devise strategies to improve the efficiency of their procure to pay process.

Savings

Savings are one of the most important KPIs that companies aim to achieve. It considers cost per invoice and purchase order, spend under management, and procurement ROI. The cost to process purchasing documents or invoices involves a list of variables and is the most disputed KPI in the procure to pay process. The rest two factors are helpful in determining the cost-effectiveness of any organization.

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Optimizing the Procure to Pay Process and Achieving Better Savings