Tag: procurement process

purchasing and procurement

Understanding the Basic Difference Between Purchasing and Procurement

What is Purchasing and Procurement?

Purchasing and procurement stand for far more complicated processes than simply bringing goods and services to an organization. They are the foundation of strong, collaborative relationships with suppliers. However, often, purchasing and procurement are used interchangeably and are misunderstood. Through this blog, our experts try to clear the difference between purchasing and procurement.

Procurement is a business management function that involves the acquisition of products and services. It covers a set of activities from identifying the need for goods and services in the organization to strategically acquiring them. The procurement process usually involves activities such as:

  • Selecting vendors
  • Establishing payment terms
  • Negotiating contracts
  • Purchasing goods

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5 Key Procurement Trends That are Crucial for Procurement Organizations in 2019

Top Procurement Trends for 2019

With the procurement industry experiencing continual transformations, companies are facing the dire need to look for new ways to assess, increase, and monitor the efficiency of their procurement process. They are now expected to devise an effective procurement plan that can enhance their sourcing and procurement process.

However, doing this is it is not as easy as it appears to be. Companies are driven by different environmental and social risks and require transparency in their supply chains. As a result, more comprehensive methodologies need to be embedded in the procurement process and to ensure sustainability.  At SpendEdge, we understand that procurement is not just limited to minimizing costs or mitigating risks. Therefore, in this blog, our team of experts has highlighted the key procurement trends that are going to impact businesses in 2019.

Have you ever thought why some procurement organizations fail to keep up with the demands? It’s because they fail to predict future procurement trends. Get in touch with our experts and know how major procurement trends can affect your business. 

Top procurement trends for 2019

Surge in digital technologies

Digital technologies such as blockchain, cryptocurrency, cloud, and artificial intelligence (AI) are among the top procurement trends for this year. One of the key reasons behind the emergence of digital technologies is the willingness of companies to make the digital business a top priority. Companies are now finding significant automation potential in transactional activities and strategic tasks and bodes well for most businesses since it will enhance their efficiency.

Cybersecurity threats

Although digitization is taking a leading edge, the growing amount of data is leaving the entire supply chain vulnerable to cyber threats. This is the reason why cybersecurity is considered to be one of the major procurement trends for 2019. Organizations can adopt various strategies such as limiting supplier access to IT systems and ensuring compliance to enhance their procurement process.

Focus on reducing indirect spend

Indirect spending has always been a prime concern for procurement organizations. It involves a large supplier base and a comprehensive governance process to avoid leakages, contract terms, and paperwork.  Over time, these factors become so complex that organizations start losing out on crucial opportunities. Therefore, organizations have started looking for automated financial and tail spend management solutions that can ease out the complete process for them.

Interested in reducing the indirect spend for your organization?

Request a free proposal and know how understanding the latest procurement trends and leveraging tail spend management solutions will help you reduce indirect spend.

Prominence of big data

Disruptions in the supply chain can lead to increased costs, labor unrest, and customer service challenges. Big data can provide critical insights required for predicting events or disruptions. Businesses just need to collate data points from all sources and align them to their business operations to make the most of big data solutions. These benefits are making big data one of the main procurement trends for 2019.

Enabling sustainable procurement

With procurement functions shifting beyond cost management, procurement organizations have started employing sustainability as a lens to identify environmental and social risks. This is because environmental risks such as resource and raw material scarcities are increasing. Also, risks associated with social factors are becoming more visible and less acceptable as the younger generation of consumers is entering the prime purchasing age. Analyzing procurement trends will help businesses in sustainable procurement and entailing performance-based metrics into each phase of the procurement plan.

Analyzing procurement trends helps organizations to keep themselves prepared for the changing market dynamics. However, it requires thorough market knowledge and expertise. Request a free demo and know how our experts can guide you in analyzing the recent procurement trends.

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How Purchasing and Procurement Can Impact the Efficacy of Businesses?

Until now, purchasing and procurement were a necessary part of multinational corporations but seldom celebrated. But changing times have compelled organizations to acknowledge the role of purchasing and procurement when it comes to driving the success of organizations. Through this blog, we are discussing the difference between purchasing and procurement process and how it can impact the quality, innovation, efficiency, and savings of an organization.

Mostly, purchasing and procurement are considered to be synonyms by people. They never consider purchasing and procurement as different terms as both are related to the acquisition of goods or services for companies. Therefore, it becomes vital for companies to understand the difference between procurement and purchasing to understand the impact on their organizations.

At SpendEdge, we understand the impact that a process can have on your organization. Therefore, our team of experts has highlighted some major aspects that are influenced by the procurement purchasing process.

Are you interested in analyzing the impact of purchasing and procurement activities for your organization? Get in touch with our experts and know how your procurement and purchasing impacts your business.

What’s the difference between purchasing and procurement?

Procurement is a broad and comprehensive concept. However,  procurement can be defined as a set strategic, tactical, and operational processes that are required to optimize the supply outcomes for needed external goods and services. It also involves processes such as spend analysis, sourcing, inventory management, and operational purchasing.

Purchasing, on the other hand, can be considered to be a part of the procurement process. It is a transactional process that deals with how goods or services are ordered. The purchasing process primarily focuses on stock purchases (inventory), non-stock purchases (expense), and subcontracting.

Importance of purchasing and procurement process for organizations

Improve quality

Purchasing and procurement departments can control the quality of products and services by setting target performance levels for quality. This helps them track the quality of products against set parameters such as durability, the look, or the delivery timelines. In some companies, purchasing and procurement departments even work in alignment with their vendors to develop processes and ensure quality.

Want to know how improving quality can benefit your business?

Request a free proposal and know how our procurement experts can help you enhance the purchasing and procurement process.

Pursue innovation

Since the purchasing and procurement department is always in contact with innumerable businesses, they are in the ideal position to source innovative goods and services. Such a form of strategic sourcing provides businesses with the required competitive edge in terms of price, quality, or convenience.

Increase efficiency

Many companies consider procurement purchasing process as a one-dimensional process. However, when implemented strategically within the organization, the procurement and purchasing process can lead to greater efficiency. An optimized purchasing process can enhance the sourcing capabilities and ensure timely delivery of goods and services.

Achieve savings

Purchasing and procurement have a considerable impact on the bottom line of any organization. They directly impact the sales and costs of the company. Efficiently managing procurement and purchasing allows organizations to achieve immediate cost savings by procuring items, services, and contracts at the best possible prices.

Improving the bottom line of any organization requires consistent efforts and expertise. Request a free demo and know how our purchasing and procurement services can help your organization.

 

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Procurement Cycle Challenges and Ways to Overcome Them

Modern companies are operating in increasingly intense scrutiny driven by technology, customer reviews, and expectations for service improvements. Their main objectives are to minimize cost by improving the procurement cycle, manage risks, maintain vendor relationships, and streamline processes.

However, reducing costs still remains the top priority for businesses. Procurement professionals need to think before making any purchase. It might sound an easy task, but only experts will understand the difficulty involved in selecting and creating purchase orders for every request that comes to their desk. This is where unnecessary expenses start. Therefore, it is important for companies to profile the challenges faced during the management of the procurement cycle that can lead to the failure of the project.

Key procurement cycle challenges

#1 Inaccurate planning

Mostly, the decisions made while planning for purchase and delivery are crucial as they affect the overall schedule and total cost of the operations. Improper planning in the procurement process may result in material shortages or surpluses, cash flow problem, and unnecessary delays. Therefore, companies should follow procurement best practices and prototype planning models to facilitate pre-tender and procurement processes and improve their procurement cycle.

Want to avoid unnecessary material shortages and cash flow problems? Get in touch with our experts and know how they can ensure best in class procurement cycle for your organization.

#2 Reducing costs

The process begins with the proposal of the annual budget. However, the reduction of costs majorly depends upon effective supply chain management. Even small reductions in material costs in a company’s total operating budget can impact the organization positively by increasing its profit margins. Therefore, professionals managing the procurement cycle must adopt procurement best practices and negotiate effectively to obtain materials of the highest quality at the lowest cost.

#3 Legal and political environment

Legal environment refers to a broad legal framework that governs all business activities including research and development apart from procurement rules and regulations. It involves various aspects such as manufacturing, finance, marketing, and contracts of the procurement management system. Similarly, the political environment includes trade associations, professional associations, and business firms or companies that are engaged in the procurement process.  Their varied interests affect the overall budget of the procurement management system and disturb the complete procurement cycle. Such an environment requires companies to include detailed provisions in their contracts and develop a strong coalition among policy makers, bureaucrats, and interest groups to get their procurement process in place.

Interested in reducing costs for your organization?

Request a free proposal and know how improving procurement cycle can help you cut costs.

#4 Maintaining vendor relationships

Vendor relationship management is an intellectual approach to manage relationships with vendors who supply goods and services to the organization. The methodologies of vendors pre-qualification in the procurement cycle vary from company to company but the relationships strengthen when procurement professionals follow mutually agreed upon standards to assess the performance. 

How to manage your procurement cycle?

Our team of procurement experts at SpendEdge realizes that ensuring efficiency in the procurement process has a positive chain reaction within the entire organization. Therefore, we are highlighting four steps that are critical to step-up your procurement cycle:

  • Incorporate a contract management system
  • Maintain a good supplier relationship
  • Automate processes
  • Employee training and development

Making changes in the procurement cycle may seem a daunting task at first but it is extremely beneficial in the long run. Request a free demo and know how our experts can help you improve the procurement cycle.

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Top 3 Procurement Challenges and Solutions Companies Need to be Aware of in 2019

The future of supply chains is not just confined to ensuring reduced price and timely delivery of goods. It is dominated by various other factors such as legal issues, sustainability concerns, and regulatory compliances. This creates the need for companies to utilize procurement services that can enhance the speed, efficiency, and accuracy of their processes. Through this article, we’ll discuss what are the major challenges that companies face while procuring goods and services and why they need procurement services providers like SpendEdge.

Why use procurement services? 

Maintaining domain expertise in every category of spend is still an expensive and difficult task for many organizations. Leveraging a procurement service provider can assist companies to conduct a rapid analysis of an organization’s spend, negotiate with suppliers, and avoid the burden of building an effective procurement infrastructure for non-strategic categories.

At SpendEdge, we understand that not every organization can employ a strategic sourcing process and train employees on sourcing automation tactics and category and supply market assessments. Therefore, our team of experts has highlighted some major challenges that companies face while sourcing good/services and have offered viable solutions that procurement services can offer.

Want to leverage the benefits of procurement services for your organization?

Talk to our experts and know how our procurement methods can be leveraged to design an effective procurement strategy that can suit your business needs.

How can procurement services address top supply chain challenges?

Challenge 1: Complex spend

Every year, businesses make millions of purchases that are either too small to be handled or are too infrequent to be included in a single vendor catalog. For most businesses, such categories are sourced manually using internet searches or emails, increasing the complexity of the process.

Solution

By utilizing strategic procurement services, companies can prioritize categories on the basis of market size and product innovations and provide a comprehensive overview of all efficient suppliers in the market. Companies can even employ online procurement solutions to decrease the complexity of spend.

Challenge 2: Risk

Not only big businesses, but mid-market companies are also becoming vulnerable to various strategic and operational risks in their procurement process. They require a holistic risk strategy that can minimize total risk exposure and enhance their supplier risk management.

Solution

Procurement services help companies with risk mitigation investments and risk transfers. They analyze the suppliers before onboarding them and continuously monitor them to improve supply chain visibility and reduce the risks of working with new vendors. Also, procurement services help companies to evaluate the procurement process and manage procurement risks across various business units.

Devising a holistic risk strategy can be a herculean task for many companies. Request a free proposal and know how our portfolio of procurement services can help you successfully mitigate risks.

 

Challenge 3: Information

Companies sticking to traditional methods can never gain a competitive edge in the market. They need their procurement department to be comfortable with advanced data mining and analysis technique in big data to become market leaders.

Solution

Firms offering procurement services possess the capability to analyze data from multiple sources and prioritize business processes. They help companies to recognize the equipment and applications associated with each business process and provide the needed procurement services.

Want to implement advanced techniques for extracting valuable insights from data?  Request a FREE demo below and know how our procurement services can help you.

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What is the Real Reason for Procurement Companies to Leverage Procurement Solutions?

With cost reduction initiatives becoming a top priority in 2019, most stakeholders have started to scrutinize expenditures more carefully. They are finding ways to better manage costs and expenses. According to a recent study, companies waste as much as 30% of their total expenditures. These expenditures are deemed wasteful as they add no value to the customers or companies. Therefore, it becomes imperative for businesses to have an effective procurement system in place so that they can cut the right costs through strategic reductions that don’t impede their ability to remain competitive in their respective marketplace. Strategic procurement can impact the company’s bottom line, but not every business possesses the resources and expertise to optimize their procurement capabilities. 

Some companies find it quite challenging to manage a budget when unexpected costs arise. They lack procurement strategies that can best identify the alternate approaches for them and provide a realistic assessment of risks. This not only increases the entire cost for businesses but also hampers the efficiency of organizations. Therefore, it becomes crucial for companies to leverage procurement solutions to enhance their capabilities.

At SpendEdge, we understand that procurement can be very complex and cost consuming in many large companies. So, our team of experts has highlighted three major objectives that companies should try to achieve while utilizing procurement solutions to thrive in a competitive marketplace.

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4 Biggest Challenges Facing the Public Procurement Process

The procurement process forms an integral part of any organization’s process-driven and innovation strategies to improve efficiency, reduce costs, and make advancements. When it comes to the public procurement process, there are several unique roadblocks to implementing these strategies processes, and systems successfully into existing operations. This makes the public procurement process more time-consuming, inefficient and costly. Consequently, the communication channel is not solid, supply becomes unstable, and quality deteriorates. In this article, we have discussed in detail some of the biggest challenges in the public procurement process and the ways to mitigate them. Also, we have suggested a few measures to tackle those challenges efficiently.

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4 Ways to Step-up Your Procurement Cycle

Maintaining efficiency in the procurement cycle has a positive chain reaction within the organization as a whole. The key objectives of a procurement process extend to far more than merely obtaining goods and services to satisfy the internal requirements. A successful procurement process aims to optimize business operations and create a significant business value. Having a highly streamlined procurement cycle is vital to the financial success of a company. But even the best procurement process often require refinement in order to yield better returns. But in today’s highly competitive world, if you keep doing what you always have been doing, chances are that it might become obsolete. To survive, companies need to keep constantly updating themselves on the market trends and ensure that the procurement cycle is best in class. Consider incorporating these methods to Request Demo_SEimprove your procurement process:

  • Incorporate contract management system

Companies can use technology to improve the procurement process is by incorporating a contract management system. It will alleviate the whole task of creating new contracts every time the company onboard a new supplier. Contract management and the use of standard templates is more time-saving and facilitates the improvement of efficiency. Furthermore, standard contracts can avoid the risk of errors being made in the procurement cycle and ensure that all important concepts and language are included in each and every contract.

  • Maintain good supplier relationship

Ensuring a good relationship with the suppliers is critical in a good procurement cycle. A mutually beneficial relationship between the organization and suppliers comes with a great deal of effort and hard work. It is important that businesses are dedicated to growing relationships with their vendors and suppliers through trust, honesty, open communication, and ethical business practices. It will also result in improved goodwill as a happy supplier will most likely spread a good word about the company, leading to new sourcing avenues.

  • Automate processes

A company’s procurement cycle might function well manually. But its full potential and true efficiency can be realized with automation. With a good e-procurement program in place, companies can gather data, conduct supplier research,  gain greater visibility into the spend, and ensure the requirements are being met. Furthermore, this can help streamline the procurement process, making it easier than ever to create contracts, send payment, and track invoices and shipment in order to drive efficiencies.

  • Employee training and development

Well trained employees can contribute majorly towards an efficient procurement cycle. Training and development create scope for employees’ personal evolution but also has a significant impact on the company’s productivity and profitability as a whole. It reinforces the goodwill of the business and allows it to maintain the competitive edge. Furthermore, it leads to higher customer satisfaction, lower costs and faster growth.  As a form of effective communication, training can lead to an increase in productivity and allow employees to make the best decisions for the company’s progress.


To know more about the steps involved in procurement cycle and the challenges in the procurement process

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