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Posts Tagged ‘procurement’

Why Is It Important To Constantly Review Your Procurement Strategy?

Thursday, September 27th, 2018

An organisation’s procurement policy is the crux of operational efficiency. The difference that an intelligent procurement strategy can make to businesses is difficult to fathom. In light of the increasing need to perfect procurement functions and policies, organisations have started hiring top procurement companies to help them and enable them to meet their needs.

In the scenario that your organization employs an outsourcing agency to manage procurement functions, it is important to consistently review performances and ensure all organizational demands are met.

Another important thing to factor in is the cost of procurement – if your cost exceeds the input, it’ll lead to imbalance in company expectations and output.

What should you be reviewing?

Cost

For any organization, cost plays a very important role. From sourcing to vendor management to ensuring the company doesn’t face any issues due to procurement are some of the key areas where an outsourcing company comes to your rescue.

In terms of cost, it is definitely advisable to express and ensure budgets are not exceeded and also that budgets are utilized to their full potential.

Output

Another important thing to review is the output of the procurement function. If the output is drastically reduced and there is a noticeable change in delivery of goods, mismanagement of funds or a general stagnancy, it is a clear indication that the procurement strategy needs an overhaul upgrade.

Consistency

Consistency though is one of the most ignored factors, it’s an important measuring tool. To know what works and doesn’t work, it is important to consistently work with a certain section of vendors at a particular cost and then measure if it is working for you and your costs.

If you’d like to understand more about procurement management and its benefits, you can get in touch with our experts at www.vpurchase4u.com or write to us at info@vpurchase4u.com.

Outsourcing Procurement : Understanding Benefits

Tuesday, September 25th, 2018

As everyone in the business world in India is aware, outsourcing procurement has become a widespread practice. At the same time, it is also interesting to note the extent of skepticism surrounding the growing sector and how sourcing companies in India are tackling this uncertainty.

 

Procurement outsourcing companies need to understand the hesitancy from the end of organizations and organisations need to accept the huge impact sourcing companies can have on all business operations especially vendor management, increasing cash flow and managing tail spends.

Let’s take a look at the benefits of engaging a top procurement company for you organization:

  • Concentration on core business processes thus saving money, energy and time. It also allow the organisation’s resources to be free from additional stress of coordinating with vendors and tackling periodic payments.
  • Market intelligence which will lead to better cost management, better suppliers and a huge variety of goods and services at competitive prices.
  • Expert knowledge and guidance from procurement consultants
  • An opportunity to investigate and analyse the gaps in the existing system and hence improve upon the same
  • Negotiation benefit by vendor management experts in the field for more cost effective benefits
  • Seamless source to pay services are provided by most procurement companies which help in streamlining the financial system

The most important change however achieving operational efficiency across functions. From financial to resources management to tail spends, everything under a procurement sourcing company is streamlined and smooth. Owing to professional expertise, sourcing solution consultants focus on bringing maximum profits to your business with minimum input.

It may be argued that the reduced control on day-to-day services is a factor that hold back organizations from investing in a sourcing solutions company, but in the long run, the impact of loss of control is negligible. The procurement agency is focused on building customized solutions for your organization irrespective of the challenges faced.

Organisations in India are gradually understanding the need for a procurement sourcing company and are investing in the right place for their benefits and it is only a natural way to proceed. For organizations which are wary to give up control of their operations can proceed slowly. Sourcing one service from the gamut of procurement services and hence measuring returns might be a great idea for organizations who just want to test the waters.

To understand the growing role of procurement companies in India and how they benefit businesses, you can visit www.vpurchase4u.com or write to info@vpurchase4u.com.

What Are The Advantages of Procurement Planning?

Friday, September 21st, 2018

Procurement is an important part of business transactions for organisations around the world. The planning for procurement though depends on a number of factors which define a procurement plan for present and future needs.

Businesses around the world hire top procurement companies in an effort to perfect their procurement function and ensure efficiency in all related functions.

However, the question may arise why organisations shouldn’t procure directly and spend time and money for outsourcing? To put it simply, in comparison to both processes, outsourcing procurement is far more profitable. Let’s take a look at why:

Reduced costs

Direct procurement can lead to very high costs since an organization will not have access to the market intelligence that an outsourcing company will have. Also, direct procurement can lead to consumption of more time and resources which can be focused on internal company functions.

Another point to note is that organisations sometime need to make small scale purchase which will cost them much more than their budget. Additionally, vendors don’t offer one time discounts to buyers who buy sporadically whereas an outsourcing company will ensure that you get the price for the services and goods you need.

Quality standards

Let’s be real, it’s almost impossible for organisations to focus completely on the standard of goods when their core function is focused on bringing profits. This leads to a weak procurement system where standards are not as per the amount spend.

Let’s assume the quality of goods are not upto the mark for a period of six months, but the procurement function is overburdened and doesn’t realize the issue till it’s out of hand. In that case, finding new vendors in a budget which suits your organization becomes a difficult task.

Handling relationships

In a country like India, vendor and buyer relationship holds a lot of importance. In case of emergency or lack of quality goods or delay in payment, a healthy relationship with a vendor can last a long time. If you hire an outsourcing company, the company will be responsible for handling all relationships with vendors and will also insure they put in time and effort in researching the best vendors in fields related to your organization. The responsibility of vendor management, procurement, payment to vendors, market intelligence lies with the outsourcing company thus drastically reducing the burden on your organization.

However, before hiring a procurement company, it is important to analyse and investigate if your organization needs a procurement company at all. Once the organization has decided on a course of action, the procurement company will take over and work on actionable points.

To understand more about procurement and how it will benefit your company, visit www.vpurchase4u.com or write to us at info@vpurchase4u.com.

How Important is Supplier Management for Procurement Efficiency?

Tuesday, September 18th, 2018

Procurement managers are faced with unusual situations quite often. The very nature of their job entails an unexpected environment where changes take place abruptly and for the sake of efficiency, one needs to be prepared.

Suppliers are an integral part of the procurement system and a lot depends on the efficiency of suppliers and the services as well as goods they provide.

Most organisations grapple with the problem of unreliable suppliers, huge supplier costs and low quality of goods and services and hence forth invest in top procurement companies or the best sourcing companies.

The question then arises, what can be done to ensure that sourcing and in turn supplier management is a smooth, hassle free process.

Supplier performance

Analysis of supplier performance is the primary step to ensure an efficient supplier function. An organization that doesn’t periodically review supplier functions tends to regret it eventually. Supplier performance needs to be understood on the basis of quality of goods, timely delivery and cost effective.

If a supplier who supplies quality goods to your organization but charges an exorbitant price; is not a value addition to your procurement process. In fact in the long run, the vendor might be a liability.

Financial Analysis

From expected cost to actual cost, purchase price variance to vendor payment history are some key performance indicators of how your organization is performing.

It is important to review payment history to ensure that delay supplier payments are not taking up huge interests and the contracts that are made up are for the mutual benefit of both organisations and vendors.

It is also crucial to conduct a comparative analysis of existing vendors and draw up a conclusion of vendors that are performing and vendors that are not contributing to the holistic growth of the organization.

Considering the trend of changing business practices and the increasing popularity of sourcing solutions, businesses have begun to outsource essential functions in an effort to focus on core areas.

Using internal resources for management of sourcing, vendors and payments takes away from the efficiency of business processes and leads to an unbalanced organization framework.

The changing trend also owes its popularity to the success of outsourcing these functions. Studies have shown a marked improvement in the performance of organizations as well as ensured the implementation of a successful vendor management system.

If you would like to understand the benefits of sourcing solutions for your organization, you can get in touch with us at info@vpurchase4u.com or visit www.vpurchase4u.com

 

Supplier Management : How It Benefits Your Business

Thursday, September 6th, 2018

Supplier management is the core of a successful procurement strategy. Many big organisations make the mistake of assuming that supplier management is a seamless process which doesn’t require too much effort or planning. On both accounts, this doesn’t hold true. Supplier management companies in Delhi and procurement agencies in India concentrate on the core processes of your business and thereafter bridge the gaps between input and output.

Every process needs to be measured in an effort to understand its effectiveness. If a process isn’t functioning at its optimum, it’s doing more harm than good. Now, in respect to supplier performance, it can be measured both qualitatively and quantitatively. The measure differ from organization to organization but broadly are the same as – on time delivery, quality, price and cost. For a professional procurement agency, this is an inbuilt part of the analysis and report generation process, however it is essential to analyse, investigate and hence act upon the findings.

Expert advice

Procurement experts offer strategic advice and help you with all problems relating to sourcing, vendors and market intelligence. It is crucial to constantly analyse how and if suppliers can resolve problems, what is the kind and extend of support they provide and how much focus is given on new product development. Suppliers who understand the need of your business and fulfil it accordingly should be among your top preferences, though market research should be an integral part of your primary process.

Treat your suppliers differently

Suppliers are all different and it is essential for the procurement team to apply well-defined principles to ensure a strategic process is implemented for an efficient framework. Typically 20% of your suppliers constitute 80% of your indirect spends and it is vital to conduct periodic checks on your business. It will also greatly help your cause, if the suppliers you work with constantly device new plans to ensure the most cost effective processes for your organization.

For any business, new or established, the process of procurement is the most essential and should be enhanced at every opportunity. Be it a new market intelligence gathering strategy or a new set of products for which the organization needs suppliers – research, investigation and implementation is the appropriate way to proceed.

If you’d like to understand more about supplier management, procurement or source to pay, you can get in touch with our experts at info@vpurchase4u.com or visit www.vpurchase4u.com.

How Can Benefit from Modern Sourcing Solutions?

Monday, August 20th, 2018

The primary objective for a company is to consistently increase its profit, expand and explore more opportunities. The objective can have multiple layers but in itself, it remains the same across industries – to garner more profit with minimum investment.

The business eco-system today is going through its fair share of changes and is discovering a system of efficiency that is positively affecting tail spend management.

Proving this fact is the rising popularity of sourcing solutions as a strategy to save money while maintaining operational efficiency.

Reduce:

Reducing the time taken for operational processes including vendor management, sourcing of goods and services impacts the over-all time and energy spent. Sourcing and procurement management need to be processes that don’t take from your core business processes but instead contribute to over-all growth.

Improve:

Review, analyse and make improvements to existing processes in an effort to bring more efficiency. Consistent vendor reviews, collecting market intelligence and sourcing at a reasonable cost are all steps one can undertake for long-term strategic planning.

Eliminate:

Eliminate processes that hinder your business processes and restrict your business from achieving operational efficiency. Processes tend to become clogs if not reviewed consistently. They are affected by both external and internal factors and need to be analysed objectively for them to have any long-term impact.

Outsource:

Outsourcing most of your processes will relief resources from undue burden and will drastically improve performances. The operational success of any organization is dependent on the utilization of two very crucial resources – time and manpower. If vendor management, which is an integral process of any business, is outsourced to experts, not only do you save money but also gather a huge market intelligence which didn’t exist before. The complacency of existing redundant processes is immediately traced and removed by outsourcing expects to recognize the needs of your business.

The need to recognize loopholes and close them with stronger processes is the need of the hour for any business looking for long-term growth. Short sightedness to save money leads to a series of processes which don’t benefit your business but instead create a circle of unending paperwork, approvals and tedious processes.

Sourcing solutions experts understand the needs of your business, the existing processes and the areas which need immediate attention. They bring seamless processes which promote transparency and accountability while at the same time saving money, energy and resources for the growth of your business.

To understand more about sourcing solutions and how it can help further your business, visit www.vpurchase4u.com.

Procurement: An Indispensable Function for Businesses

Monday, July 16th, 2018

Defined in simple terms, procurement is a strategic function to minimize the efforts of the organisation’s resources while at the same time increasing the organisation’s profitability. It is a strategic function to obtain raw materials, services or any kind of supplies essential for the organisation’s functioning without stressing existing resources.

This identification of potential vendors and the subsequent purchase of required goods and services is the primary goal of a procurement department or agency and one that makes all the difference in optimal functioning of businesses.

How to achieve primary goals of procurement

The primary goals of procurement is to obtain best services and goods at a suitable cost with an aim to increase over-all productivity. Outsourcing of this function ensures superior quality of goods and services at the best possible cost as well as the updation of market database and the knowledge of market changes and their impact.

As the business world undergoes a series of changes, it is time for organisations to review their current processes and update them to integrate new innovations.

The basis of an optimum procurement process is finding the right source at the right time at the best price in comparison to existing procurement standards.

Procurement for your business

While the standard rules of procurement apply across verticals and industries, it is essential to customize procurement processes according to the needs of your organization. Suppose vendors in Haryana are working at a cost much lower than vendors in Delhi, is it wise to procure from Haryana because the cost of transport would be similar to cost of goods or would it be sustainable to devise a strategy to achieve the best of both worlds?

Procurement consultants excel at strategy building in an effort to cut costs, create a viable database and ensure the best use of resources for maximum output.

Considered to be simply a value-added function, procurement in reality can lead to incremental savings and efficiency across business functions of human resources, finances and operations. Offering a better visibility into company spends and budgets, financial efficiency through procurement processes can hugely impact an organisation’s profit potential.

Preparing an organization for risks

A lesser known and mostly ignored impact of procurement is the ability of an organization to prepare itself for risks. Offering transparency into operational and financial functions, procurement also enable a business to take stock of its overhead expenditure and skewed financial processes.

To learn more about how procurement can lead to incremental savings, you can get in touch with our consultant at atul.masih@ascgroup.in

How to cut your tail spend by 80%

Tuesday, June 19th, 2018

The age old problem of unmanaged costs has driven established organisations to take drastic steps. Every organization strives to excel at – minimum input for maximum output, though what they forget is dynamic external factors. Best industry practices are a guiding path for new, growing and to some extent established businesses; however for tail spend management, it is crucial to form a structure that is best suited to your needs.

What is tail spend management?

In simple terms, tail spend is a series of small purchases that are either too big or impromptu to be handled by procurement agencies. Organisations are policy-driven with a stack of paperwork to be fulfilled for each transaction. Though this holds true in 85% of organsation based transactions, it may not be true for the other 15%.
Lengthy paperwork, redundant contracts, sudden demands, low quantity and unreliable vendors are all contributing factors to a significantly high tail spend. In the last decade, companies of all sizes have gradually shifted focus to sourcing, vendor management, tail spend management and resource management. What earlier was considered as extra, unnecessary cost, today has become a key area for organisations to focus.

The need to focus on core business

The ability for a business to focus on their core functional areas while at the same time maintaining low tail spends is optimal. However it is observed that attention on reducing tail spend takes away from the core business which leads to an unbalanced work structure. It’s best to employ a third party tail management agency which not only identifies areas that need attention but also predicts potential troubling areas and thereafter prepares a plan of action.

An effective strategy

Tactical buying, spend analytics and local market knowledge are significant areas through which an organization can concentrate on their progress rather than managing time consuming functions.
Analyse and construct a strategy that works for your business and turns extra tail spend into incremental savings. If this investigative process is not a feasible option for your business, it is best to concentrate on employing a third party agency which understands your business, industry and work ethics. Not only will a third party agency nurture your current work flow but will also bring in an uncomplicated approach to reduce tail spends.

Get in touch with our consultants for a more thorough understanding of tail spends and how you can reduce it for your organization. Write to us at atul.masih@ascgroup.in

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