Ensuring efficiency in your procurement process has a positive chain reaction within your entire organization. The objectives of a world-class procurement organization is far beyond the traditional belief that procurement’s primary role is to obtain goods and services in response to internal needs. In fact, a successful procurement process aims to optimize the whole process to create significant business value.

5 Ways to improve your Procurement Process

According to a survey by Wax’s Digital new Procurement Innovation Pathway report , procurement is at the gist of many businesses, as a follower rather than a leader. Based on the survey, out of the 100 senior procurement professionals, 69% considered themselves pivotal to business innovation while 80% expect to be so in the future. While 76% said that they are involved in a range of business innovation, only 27% are leading those innovations. The research found that the emphasis is mainly about collaborating which prevents procurement from taking a position of leadership in innovation.

There are various ways to improve the procurement process; some are minor changes that focus on improving part of the process such as creating essential internal documentation. Other major changes can go as far as improving the whole process. Here are some examples of ways to improve the procurement process which adds value to an organization:

  1. Incorporating a contract management system

Technology creates wonders! So why not make the most of it as it can help you save lots of time and be more efficient. One way of using technology to improve the procurement process is by incorporating a contract management system. Let’s admit it: creating contracts is time consuming and businesses often work with hundreds of vendors every year. Using a contract management system will alleviate the whole task of creating new contracts every time you onboard a new supplier. It will help you understand which contract can be reused from one supplier to the next. This will allow you to create standard contract templates which will require only minor updates when they are used.

  1. Increasing employee capability through training and development

Training and development remains one of the key factors that lead to a successful business. A three-year researched project commissioned by Middlesex University’s institute for work based learning  found that from a 4300 workers sample, 74% felt that they were not achieving their full potential at work due to lack of development opportunities. The result of this research highlights the importance of training and development to ensure successful business continuity. It benefits not only the employees’ personal evolution but also impacts on the company’s productivity and profitability as a whole. It reinforces the goodwill of the business, allows it to maintain the competitive edge and leads to higher customer satisfaction, lower costs and faster growth. The emergence of innovative training solutions is increasingly being adopted by leading procurement organizations. For instance: high-impact eLearning solutions combined with simulations where employees can apply what they are learning in their jobs. 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.

  1. Maintain good supplier relationships

A procurement professional needs to be surrounded by a group of happy and qualified suppliers. Of course, a bid request can be put out to new vendors whenever you need a product and service but those bids will take a huge amount of time to finalize. Having to start over again every time you need to issue a bid request involves a long process of researching each new supplier, learn about their industry position and identify their negotiation tactics. To prevent this from happening, it is better to maintain a good relationship with a group of suppliers you can trust. Streamlining the procurement in this way will make your job more efficient. Besides, it might also increase your goodwill as a happy supplier might tell others how good you are to work with which might lead to new sourcing avenues. All you need to do is: be fair with the suppliers in your business dealings, ensure that they are paid on time, put out detailed and straightforward RFPs and appreciate their professionalism and skills.

  1. Reduce Expenses

One of the most appreciated qualities of procurement professionals is the ability to reduce costs while procuring the items a company need. The one question which comes to the mind is how? The key is to think carefully before making a purchase. It sounds easy but any procurement professional will understand this point since they might get tempted to create purchase orders for every request that comes at their desk. This is where the trap lies, leading to unnecessary expenses! According to Caps research, for every one dollar you spend on supply management gives you an estimated return of $6.77. This leads us to understand that when you take the time to identify, research, acquire and manage the products and services you company rely on, you are more apt to reduce expenses considerably.

  1. Using analytical and negotiation skills

As a procurement professional, juggling between planning and executing projects, dealing with multiple vendors and negotiating the best deals, it goes without saying that you have some great analytical skills. To make the most of these skills, they should be applied to more than one area in the process. For example, an in-depth understanding of quantitative data is essential to make the best financial decision for your company. A procurement professional needs to walk on fine line as far negotiation is concerned. The struggle is between making the best deal for the company and at the same time makes sure that a good relationship is established with the suppliers. A good way to sharpen your negotiation skills is through advanced simulations and training.

Conclusion:

An effective procurement process will improve an organization’s bottom line and increase efficiency and profitability. This will definitely add significant value to your organization as a whole.  Of course, making changes can seem daunting at first but in the long run, they prove to be beneficial in multiple ways.