The procurement area is an important gear for smooth operation of businesses. Therefore, any of them that intend to have sustainable growth and stay competitive in the market must understand, more than ever, the importance of procurement management and look for ways to make such area more strategic and efficient.
In the past, professionals conducted most of their work manually. This demanded a lot of time from the team, and increased the risks of recurring errors considerably. Over the years, business leaders realized that if without investments in technology and good procurement management practices, they would be left behind, since this area concentrates a large part of companies’ results.
Therefore, a strategic positioning is now crucial for those businesses that want to achieve a distinguishing mark in the market.
See below some tips that will bring efficiency to your company’s procurement management processes.
6 tips to boost the efficiency of your company’s procurement management
Procurement and supply management is one of the most strategic areas of businesses. In fact, good deals and successful purchases can be synonymous with increased profits and greater competitive edge over competitors.
However, many companies are still lost with regard to efficiency. There’s no magic formula, but some tips that can help you get there.
1. Invest in buyers’ intellectual capital
Empowering buyers to show good performance in the procurement area will make processes more assertive and strategic.
Intellectual capital is linked to procurement management directly. After the company invests in trained professionals, they will be able to better cope with the area’s daily chores, anticipating possible risks and planning to meet all demands with excellence.
2. Create challenging procurement KPIs
Creating challenging KPIs for the procurement area can greatly leverage professionals’ performance, but you must be careful in this matter. The creation of extremely aggressive goals can have a reverse effect, and dishearten buyers from fighting for something that won’t be achieved.
With well-defined goals, the leader will be able to manage procurement efficiently, with a better understanding of the resources and efforts aimed at each activity.
3. Keep your procurement and inventory areas well aligned
An idle inventory represents storage costs and, depending on the raw material, risk of goods loss. This can happen for a number of reasons, either due to idle time failures or expiration dates of products. On the other hand, the lack of materials can also decrease profits, and may even cause great losses for the company, impacting procurement management in a negative way.
The inventory and procurement areas must work together. In this way, they will be capable to make the maximum offer of products, with the smallest possible stock. It’s worth analyzing the purchase and sales history, and also making a demand forecast, in order to find the safest inventory levels.
4. Select the right suppliers for your company
Choosing good business partners is also vital to assure better results in procurement management. That is, if a supplier is unable to meet a minimum quality standard, it will affect your company’s performance.
Therefore, you must plan the selection process carefully, looking for references, and analyzing the market in the right way, along with the opinions of other customers, among other aspects. And remember that the price factor shouldn’t have the greatest focus when making decisions to promote a business.
5. Promote good relationships with suppliers
Good relationships are crucial to achieve a sound procurement management in the B2B market. Through transparency and the sharing of common goals, you can build bonds of trust. In this way, the company will establish a lasting partnership, which will benefit both sides for longer.
Recurring purchases, that is, those that are repeated within a given period, are a common practice in the B2B market. Establishing good relationships with suppliers, and even developing contracts, will assure that your production won’t be affected, since they will be able to meet your needs continuously. At the same time, the supplier company will retain a customer, thus proving that this collaborative strategy benefits both sides in the chain.
6. Hire a procurement management platform
The investment in a procurement management platform helps to automate operational tasks, reducing errors and rework.
When tasks are carried out manually, processes become lengthy and bureaucratic, information is decentralized, transactions are less secure and reliable – in addition to a number of other issues, which cause financial losses, and can be easily solved with the use of technology.
As another distinguishing point, the platform allows you to generate reports and analyze data much more efficiently and reliably. This allows the leader to boost the efficiency of procurement management and make more assertive decisions.
A good example of such platform is Mercado Eletrônico’s e-Procurement solution, which offers more control, performance, governance and savings for a secure and efficient procurement management process. Only using technology you will have an end-to-end view of the supply chain.
If you think that Mercado Eletrônico’s e-Procurement can make your company’s daily chores easier, get in touch with us. We are leaders in technological solutions and services for B2B, and have already untangled the procurement areas of large-sized companies.
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