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10 Cost Reduction Tips to Improve Procurement

As a business that is conscious about maintaining its profitability, you make redundancies in some aspects of your business and cut activities and superfluous expenditure within your organisation. However, in addition to all these conventional responses, it is now also widely accepted that improving procurement can lead to significantly improved finances. Here are some tips to improve procurement and reduce costs:

  1. Be very clear about the things you need and want before asking for quotes. If you aren’t too sure about the things you need, discuss these things with a few experts in the field and build your picture; you will always find some good people that will be happy to provide ideas and advice.
  2. It’s important to be prepared and have a strategy in place when it comes to discussing rates and negotiating with suppliers. In order to achieve the right outcomes, it’s crucial that you compare objectives in advance.
  3. If you have been charged much more than you expected, ask questions; and keep in mind that if something seems out of place, there might be something that needs looking into.
  4. Look at all the billing arrangement such as direct debits, invoice consolidation, separate invoices or monthly billing etc.
  5. As a thumb rule, bulk buying is the best way to go. However, that doesn’t mean you buy so much that most of it goes waste. The idea is to consider purchasing all your equipment and stationery from a single supplier.
  6. It might just be a good idea to hire the services of an outsourced specialist who would provide multiple quotes and solutions and will negotiate on your behalf.
  7. You can set online processing solutions rather than paper/phone-based orders for all your supplies.
  8. Internal collaboration is another important aspect and you should be chatting to the individual that orders equipment and supplies. Discuss the details with your finance team about potential problems or any current billing issue – check what works and what doesn’t. It’s important to have brainstorming sessions about procurement, with different team members.
  9. Speak with external procurement specialists; that will help you know what type of procurement technology, products and services are available in the market.
  10. Assess whether your agreement will be able to stand the test of time; it is important that both the parties feel that they have achieved the outcome they want.

None of these pointers are etched in stone and you have to learn to evolve and tweak your processes and procedures as and when market conditions and requirements change. If you buy into the strategic value of the procurement aspect and think beyond procurement as being just a cost-cutting tool, it can positively impact the growth and performance of your business. There are a number of facets to value and price is only one of them.

It’s always important to maintain a very close partnership with suppliers, your employees and all the entities within the supply chain; this can go a long way in steering growth and freeing up cash. It often happens that within businesses, the staff suffers from lack of experience, energy and time when securing good deals from suppliers. But with a little bit of supervision and the right delegation, you would be able to reduce costs by following the right procurement processes.

For effective and sustainable cost reduction strategies & efficiencies that will increase your bottom line, contact the experts at Benchmark Cost Solutions at this number – 02 9525 0777. If you prefer, write to us at this email address, and we will revert quickly.

Thanks for reading,
Benchmark Cost Solutions Team
02 9525 0777

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