It’s important for companies to understand the forces and components that determine the total cost of their business processes. Understanding these cost drivers is an important first step that must take place before new best practices can be developed and implemented.
Develop and maintain supplier relationships
Supplier relationships in the past were based on price alone. The supplier with the lowest bid won the business. In practice, this meant that the supplier for a particular product or service changed frequently. Today’s best practice is to develop a long-term relationship with a supplier who can provide reasonable prices, quality products, and excellent customer service. This should reduce supplier turnover, and the associated disruptions this brings.
Use technology effectively
Technology can be a great time and effort saver when used well. This means providing employees with the training in how to use these new tools, and time to adjust to the new systems. Technology should not be thought of as a procurement strategy, but rather as a tool to implement that strategy.
Get executive support
The top managers in a company provide the funding for projects, the permission to hire the right employees to ensure a project’s success. Less obvious, but no less important is the support and commitment senior executives provide. This reassures employees working on a project that their efforts will lead to a new way of doing business that is a sound approach and a part of the company’s vision, and not a whim that will be changed or dropped.
Take a cross-company approach
Companies will benefit from involvement and support from individuals in other departments working in partnership with the Procurement group. This shared accountability and cooperation from employees in other disciplines should lead to greater understanding and buy-in of the company’s procurement strategy.
Adapted from: Procurement Best Practices: http://bit.ly/mbsgso
Supplier relationships in the past were based on price alone. The supplier with the lowest bid won the business. In practice, this meant that the supplier for a particular product or service changed frequently. Today’s best practice is to develop a long-term relationship with a supplier who can provide reasonable prices, quality products, and excellent customer service. This should reduce supplier turnover, and the associated disruptions this brings.
Use technology effectively
Technology can be a great time and effort saver when used well. This means providing employees with the training in how to use these new tools, and time to adjust to the new systems. Technology should not be thought of as a procurement strategy, but rather as a tool to implement that strategy.
Get executive support
The top managers in a company provide the funding for projects, the permission to hire the right employees to ensure a project’s success. Less obvious, but no less important is the support and commitment senior executives provide. This reassures employees working on a project that their efforts will lead to a new way of doing business that is a sound approach and a part of the company’s vision, and not a whim that will be changed or dropped.
Take a cross-company approach
Companies will benefit from involvement and support from individuals in other departments working in partnership with the Procurement group. This shared accountability and cooperation from employees in other disciplines should lead to greater understanding and buy-in of the company’s procurement strategy.
Adapted from: Procurement Best Practices: http://bit.ly/mbsgso
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