The procurement industry is always changing, and it can be hard to keep up with what’s new and necessary to implement. That said, we’ve outlined 5 purchasing concepts that every business needs to master to ensure that your purchasing process is always on the right track!
Taking advantage of your buying power
It’s important to leverage your business’ buying power to get better prices from your vendors. In other words, try to get a discount if you’ve consistently bought large volumes from vendors. Create reports based on your top SKUs, and develop relationships with your vendors to find better pricing based on your volume. In the instance that your purchasing team doesn’t have the time to negotiate, implement a platform like Order that can manage your strategic sourcing and get discounts for you. Order brings an array of world-class partner vendors to your customers, seeing exclusive lines of rewards and savings that may be difficult to grasp for individual businesses.
Budgeting is the key
While your finance department is in charge of setting overall budgets in the business, it’s still important to take note of the budget on each purchase. In general, budgets are meant to help you plan your finances and ensure your team stays within healthy bounds without needing to approve each individual requisition. Additionally, The Balance notes that it’s also meant to help you evaluate your performance – look at what you’ve actually spent throughout the year and track it against your budgets! You’ll also get to grant your employees power over spending decisions given a budget to work with, which can speed up production and processes.
Flexibility and ability to adapt quickly
Changes happen all the time — and it’s important to have the flexibility to recognize when it happens, and have a plan in place to quickly adapt to it. Flexibility, as defined by Supply Chain Quarterly, is the ability to handle change and deal with unexpected problems, while adaptability is the change that actually happens. That means being open to change, being aware of trends, and preparing to change your current process according to it. In order to be more efficient with this, make sure your employees are motivated to embrace any rapid responses to changes, and prevent any delays to avoid lasting damage to your process chain. Above all, make sure that despite any changes being made, quality should still remain your priority to avoid damaging the company’s reputation.
Choosing the right source
One of the most important concepts in purchasing is knowing exactly how to choose the right source. Smriti Chand claims the right source is a vendor who can provide the right quality order, at the right price, the right time, and the right location. It means choosing someone who can work with your business and provide what you need while maintaining a valuable business partnership. Always consider factors such as the location of the supplier, their credit-worthiness, size of the firm, and the quality control they observe.
Making technology work for you
In this increasingly digital world, it’s time to integrate technology into your procurement process. Artificial intelligence (AI), for instance, can be used in software applications for contract management, strategic sourcing, and spend analysis. If your employees are worried it might take over their jobs – you can reassure them that it won’t – as Marcus describes, AI isn’t meant to replace humans. Rather, it is meant to be a tool that can gather information to support more intelligent decisions. This also goes for other technology tools such as RFID, which Jon Wood (from SupplyChainBrain) states can help track inventory, or cloud-based computerized shipping. Additionally, use purchasing platforms and procurement software! With Order, you’ll have customizable and adaptable capabilities that the fast-paced present-day environment demands, all while giving power to the purchaser and control to the C-Suite.