Tag: procurement system

procurement risks

A Holistic Plan to Address Procurement Risks in the Wake of Brexit

Whilst negotiations are ongoing between the UK government and the European Union, many businesses are still unsure about the steps needed to mitigate procurement risks associated with Brexit. Download the full article and know the steps that companies can take to address the procurement risks.

Introduction

Brexit has brought about one of the biggest changes to global trading rules over the last years. It is impacting the procurement processes and supply chains of companies having significant operations in the U.K. and disrupting their operations. Financial plans are shredding and companies are facing major procurement risks and challenges. The probability of the UK and the EU arriving at a trade agreement seems difficult and the period of uncertainty is likely to be prolonged.

At SpendEdge, we understand that this period of uncertainty can pose major financial and procurement risks for companies. Therefore, we have listed out the major procurement risks faced by companies and shown how procurement leaders can prepare for Brexit in our new free resource, which is now available for free download.

Want to know how you can improve your procurement system? Request a free demo and access our SpendEdge Insights platform for free!

Procurement Risks that Companies Need to Address

SpendEdge has identified the key procurement risks that companies need to address in order to curb the rising uncertainty among companies and procurement leaders.

  • Exchange Rates: The declining value of GBP against the USD is one of the major concerns for companies. The UK’s decision to exit the European Union is not only increasing import costs but also influencing the movement of goods across borders. Supply chains are becoming expensive and companies need an effective procurement strategy to address this situation.
  • Contract negotiations: Contracts that were made earlier are now proving to be inefficient and are unable incorporate changes coming from currency fluctuations and new tariff rates. Companies require new terms and agreements that can ensure the right level of flexibility against different Brexit scenarios.
  • Compliance risk: The UK government’s strategy to explore new trade deals is increasing regulatory burden for companies. Also, it is pressurizing procurement leaders to focus on network planning and identify delivery locations for commodity groups.
  • To know more about the procurement risks faced by companies, request more information. 

 

What’s in it for you?

  • Gain detailed insights to address high import costs occurrinWP Cover Imageg due to decline in GBP against the USD.
  • Figure out contractual terms for new agreements to ensure flexibility against different Brexit scenarios.
  • Determine the impact of new trade agreements on different sectors.
  • Analyze the key strategies imperative for companies to comply with multiple regulatory systems.
  • Learn the procurement strategy to manage increased costs due to new tariffs and duties.
  • Discover the skill requirements needed for procurement professionals to navigate currency change.

Managing procurement risks is imperative for companies looking to gain a competitive advantage. Request a free proposal to gain a comprehensive overview of our procurement risk management solutions portfolio.

Why SpendEdge:

SpendEdge delivers robust, real-time procurement market intelligence solutions to help sourcing and procurement professionals to manage procurement risks. Our innovative procurement solutions help enterprises to transform the structural capabilities of businesses and improve execution efficiency. Our state-of-the-art procurement risk management solutions also help enterprises to transform structural capabilities, improve execution efficiency, and achieve better cost savings. We provide businesses with actionable insights and techniques to improve their procurement system.


Want to the know more about the procurement risks that companies can face in the wake of Brexit? Contact us below.

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How Following Procurement Best Practices Helped an Automotive Company to Reduce Sourcing Costs by 11% – A SpendEdge’s Success Story

The Business Challenge

The client, a well-established automobile manufacturing company in the US, was facing a number of challenges due to drastic shifts in the global supply chain. Since they were looking to expand their business to new and emerging markets, they wanted more information on the procurement best practices. Developing a suitable business model was a key challenge for the automotive company since these markets were posing challenges related to global trade and finished vehicles logistics fulfillment. This was increasing the need to reduce production costs and excess spend. Their primary aim was to outperform competitors, both in home and emerging markets, by reducing operational costs, increasing efficiency, and following the best practices to meet the regulations of the emerging markets.

Want to know how following procurement best practices can help your business reduce excess spend? Get in touch with our experts now!

Solutions Offered

To address the needs of the client, the experts at SpendEdge identified the procurement best practices for the target region and tailored a plan that would allow them to procure raw materials at the lowest possible price. The analysts at SpendEdge followed a scrupulous research methodology that comprised of primary and secondary research coupled with qualitative and quantitative data collection procedures.

In a span of eight weeks, the automotive manufacturing company was able to successfully lower their sourcing and procurement costs by 11%. Our expertise in analyzing the procurement trends and regulations of international supplier markets further helped the automotive company to improve their relationship with key suppliers and minimize procurement risks. By following the suggested procurement best practices, they were finally able to maintain a healthy relationship with suppliers. The engagement also emphasized on the importance of selecting the right supplier, especially when it comes to ensuring the highest quality, flexibility, and cost efficiency of their supplier networks.

Key Findings

By adhering to the suggested procurement best practices, the client was able to enhance their procurement system and synchronize supply management with demand across business processes. They were also able to evolve from a fixed-cost-driven supply network to a variable-cost-driven value network and streamline information flow from the department level to a global scale. This reduced costs for the automotive company by 11.2%.

Is reducing excess procurement cost a daunting task for your company?

Request a free proposal and check out our complete portfolio of procurement solutions.

What are the Basic Principles of Procurement Best Practices?

Procurement has become a fundamental enabler of business strategy and a preferred method for achieving sustainable cost reduction for many business entities. It is considered to be the most viable option for process simplification with technology enablement. Therefore, businesses should adopt procurement best practices to realize the full potential of their sourcing process.

While following procurement best practices, the team should strike the right balance between short-term savings opportunities and longer-term transformational opportunities. This provides good traction, better substantial benefits, and supply management for companies. Here are a few procurement best practices that companies should follow:

  • Devise a spend map
  • Engage with a wider organization to reduce costs
  • Ensure supply management and contract management
  • Connect commercial and technical capabilities

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Laptop with pen and spiral notebook on desk.

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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