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How can you achieve procurement best practice in your organization? In this article we look at what we think are the 5 most important steps towards effective eProcurement.
Step 1 is to get good spend visibility and understand what you are buying and how much you are spending across all your spend categories. Without visibility of spend you cannot progress. Many companies have limited or no visibility of spend that is equivalent to 20% of their revenues in value. These frequently ordered low value goods and services are seen to be too small to be managed by procurement experts. These frequently ordered items offer an opportunity for significant savings and efficiencies, but they are often seen as too difficult to deal with. The Claritum platform provides real time visibility of every transaction locally, nationally and globally.
Step 2 is taking control of spend. The best way to do this is to set up central controls on localized buying with an automated approval system to ensure negotiated rates are utilised and invoices are processed efficiently. Controlling the supply chain and the status of suppliers to the organization, as well as control over catalogs and what users can see and buy. Users will readily accept controls if they have access to the benefits of an easy to use cloud spend management platform which makes processing orders easy, quick and efficient.
Step 3 is to achieve efficiencies in processes by speeding up the procuring activity across all aspects of the procurement process. The aim is to make procurement of goods and services as simple as possible. and Freeing up valuable employees from spending too much time engaged in repetitive time consuming admin and approval processes that do not reflect the value of the purchase. This step relies on Automation of procurement processes and streamlining the supply chain to eliminate errors and waste.
Step 4 is and always will be a key deliverable for a Procurement group – Savings.The aim here is to generate savings without sacrificing the quality of products or services. Traditional supply chains often rely very heavily on a manual process and operate on a model of squeezing a supplier to provide the lowest price and forcing them to compete in increasingly less rewarding environments. The new model of supplier management is all about developing good business relationships where everyone benefits. However, this relationship is increasingly an automated relationship, especially for lower value items. It is therefore important to Implement a good supplier management platform to enable effective supplier management in an automated world.
STEP 5Create Value
Step 5 is about creating value for the organisation. For procurement to really add value the focus needs to be on tackling what matters to your organization the most. Steps 1 to 4 above place you in a position to be able to do this. Typically, the organisations goals include improving financial considerations (savings costs, improving cash flow, enforcing compliance), improving quality (delivering a reliable service, consistent quality of goods) and improving efficiency by utilising resources effectively. These goals can only be acheived by implementing the right sourcing tools such as a cloud spend management platform.
Claritum’s cloud based spend management platform streamlines the buying and selling of complex products and services. Buyers, suppliers and experts collaborate in the cloud to improve spend visibility and control, achieve cost savings and efficiencies and to reduce risk and waste.
If you would like to achieve procurement best practice then contact us and we will help you tackle this
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Gaining Spend Visibility and Control of Complex Expenditure
For most organisations complex indirect spend categories pose an opportunity for significant savings and efficiencies but are seen as too challenging to address. However, savings of up to 40% can be achieved with the right approach.