A procurement manager plays a vital role in an organisation by controlling unnecessary expenditure and identifying opportunities to save money. However, it is often the case that unless these savings are tracked and reported, they aren’t apparent to senior management. By employing strategies that provide evidence of return on investment, those responsible for procurement within a business can show that they have taken advantage of savings opportunities, are working towards sustainable savings over time and are managing financial risk. Seartec has some pointers for creating a procurement strategy that is demonstrable and visible.
Do a benchmarking exercise
A current state analysis should reveal your top categories of expenditure, supplier base, current contracts and the level of satisfaction with quality and services. This is critical as it provides a baseline to measure future performance against and takes “hard” savings (money) as well as “soft” savings (time, quality, satisfaction) into consideration.
Ensure that senior management are aware of and on board with your procurement strategy, and have endorsed it across the organisation. This increases visibility for your initiative to make savings more visible and cuts down on “maverick” spending from departments or individuals that don’t go through procurement.
Speak the right language
A CEO or CFO wants to hear about impact on the business bottom line. Try and analyse the information gathered in the bench-marking exercise, and make a business case, including forecasting to predict how savings can affect bottom line and drive operational efficiency. Back this up with an action plan, which includes an analysis of opportunities to save and an identification of the highest impact and lowest cost activities –the so-called “low hanging fruit”, which could include negotiating contract renewals and discounts, looking ways to improve cash flow such as exploring finance options or renting equipment. Seartec, for example, offers flexible rental finance options for fixed and reduced equipment costs.
Implement a spend analysis solution
Although it may seem obvious that it is necessary to collect data on company spending, many organisations, particularly large ones, have difficulty consolidating this information. Inadequate systems and software can make tracking spend labour intensive or even impossible. A report on savings figures is meaningless without reliable data to back it up so consider how you can implement a system that collects this data. For example, Fleet Manager software from Seartec automatically tracks the usage on all your copiers. Not only does this track toner levels and machine service needs, to eliminate over- or under-ordering and save time, but it logs the number of prints made, tracks colour or mono prints, detects usage levels on copiers and allows for analysis of how these machines can be used in a more cost-effective way. Also consider creating tools such as a project sheet and commodity dashboard that highlights any deviation from normal ordering –for example, vendor changes or volume changes.
Go the extra mile when reporting
Use the data gathered to do more in-depth analyses of how your company is spending. Monitor trends over time, highlight areas that need greater attention or improvement and use areas where there are significant savings as case studies to see what is working well. This gives your report a level of depth that will attract attention and increase visibility.
Feel free to contact us for more information