Today’s demanding economic landscape has put businesses in a very tough position: now, it is quite mandatory for businesses to strive for efficiency in all aspects regarding their operation. Within the supply management realm, procurement is perhaps one of the most demanding, and sometimes even the cornerstone, processes. Ensuring a high level of efficiency in procurement activities often leads to a positive aftermath in the form of a chain reaction that affects the whole organization. Well-established companies, for example, have already internalized the fact that, unlike popular and traditional belief, procurement activities encompass a much broader spectrum far beyond the simple acquisition of both goods and services. Procurement under today’s juncture is rather a way to create value throughout the whole company.
As David Kiger previously noted, procurement, and how to select the perfect supplier, is basically the essence of many companies. In fact, according to a recent survey, almost 70% of supply chain and procurement executives asserted that such area was indeed crucial when it comes to enabling innovation across companies. Therefore, it is not rare to see why companies and supply chain managers, in general, thrive to find a way to improve their current conditions regarding their procurement processes. In this sense, there are several ways to achieve such a thing, ranging from simple, even minor, changes that aim to improve a tiny part of the process, to big changes that can go as far as coming up with a whole new procurement approach. Here are several examples on how companies can definitely act in the betterment of their procurement state of the art:
Using the right contract management system
As seen during the fourth industrial revolution, technology has enabled companies to achieve the unthinkable. Asserting that technology allows people and companies to create wonders would be asserting the obvious. And one of the perks of all these technological developments is the chance of saving time and, thus, achieving a greater degree of efficiency. In this sense, one way to improve a company’s current procurement processes is by adopting and subsequently using a contract management system.
Creating contracts is, by all means, a nagging process: it is very time-consuming and, given the possibility to work alongside many vendors at the same time, it ends up being useless sometimes. By using a contract management system, procurement executives and companies, in general, can create new contracts every time they decide to work with a new supplier. Besides, it will help the company understand which contract can be actually reused depending on the supplier.
Never spare on training
Training is key, not only in procurement. Lack of training often leads to disaster. In this sense, when addressing procurement it is not possible to simply disregard the importance of proper training. According to a recent survey from a more than 4,000 workers sample, almost 75% asserted they felt that they were not performing according to their full potential. This no less than important figure is the perfect depiction of why companies, under these circumstances—where technology evolves at a rapid pace and is constantly changing—, must never spare on training. Well-trained personnel benefits not only the individuals that receive the training, but also the business’s productivity and, thusly, the company’s profitability in its entirety. Establishing a well-based training protocol ends up reinforcing the company’s goodwill, as it allows it to keep competitivity while increasing customer satisfaction, lower overhead and a much faster development towards desired growth rates. There are many ways to adopt better training procedures: simulations combined with eLearning solutions are amongst the ones that have proven to be quite useful. The whole idea around not sparing in training is to enable employees to make better decisions.
Strive to maintain a good relationship with suppliers
Procurement leaders and executives communicate with a myriad of different suppliers on a daily basis. Every time they need a quotation, if the supplier is new, the process often times demand a lot of time, since the supplier needs to know who it is working with, and whether or not it will be easy for them to reach a much better agreement in terms of price. Nevertheless, to prevent this from happening, it is much better to simply strive to maintain good and healthy relationship with suppliers irrespective of whether the company buys a lot from them or not. In fact, this is just one way to make the business more efficient, and it might also increase the company’s cache, for the supplier might tell others how pleasant it is to work with the company. But how to keep a good relationship with them? Well, the most basic thing would be to treat them with fairness, ensuring that they receive the money within the agreed time period, appreciating their time, skills and service.
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