Procurement Blog: Essential steps for making sure that your company is optimizing it’s third party spend
For many SMEs, especially those backed by investors, there is much consternation about rising costs; even reducing costs not reducing enough.
Debates about cost/income ratios prevail, yet the list of cost savings opportunities isn’t what you’d call overwhelming; worse still, your company urgently needs to free up cash flow to invest in the systems and infrastructure that will underpin your company’s growth.
Frustrating isn’t it? Believe me, the savings are there. What you need, in order to identify them, is the looking glass of a Chief Procurement Officer amidst your Executive.
Now, let me be clear: you need to look at your organization through a procurement lens.
You do not necessarily need to hire a CPO or hire a procurement department. Doing this need not cost you expensive personnel which will push your fixed cost base higher still.
It does require focus and effort. These are our steps towards looking at your business through the looking glass of a procurement professional.
- Step 1: Make someone accountable for it. The right candidate isn’t always the obvious one and they must possess three key attributes: authority, comfort with data and a naturally questioning mind.
- Step 2: Re-cut your budget and spend data so that it is cut by categories of spend as opposed to by team/site/division. Armed with this information you can start to interrogate the data from a procurement perspective.
- Step 3: Incept small and simple projects to implement savings that you identify: they are confidence building and can be used to build re-usable templates for future projects.
By incepting a team you are also formally securing the resources to fuel the project. A mix of finance, analytical and creating thinking is required so pull on resources from across the organization.
Still struggling with how or why? Enough on your plate already? If you do only one procurement activity this week then I invite you to comment in the comments below and we will send you the Procurement Levers Toolkit to help you realise the procurement potential in your business.
For a more in depth look at how you can improve profitability with procurement then book in for a free no obligation consultation with me to talk through your procurement and spend challenges.