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Creating sustainable savings through effective spend management

Many companies have mastered quoting around for the lowest price. Picking up the phone and getting several quotes for each purchase and going with the lowest was the common method of procurement for many companies. With savings achieved from the low hanging fruit, companies are beginning to expand their horizons for long term, sustainable savings in their purchasing organization.

Small and large corporations can take advantage of implementing supplier contracts with preferred suppliers. Contracts eliminate the need for ad hoc purchases that take time and leave money on the table. Choosing preferred suppliers create supplier relationships rather than simply selecting one supplier each time a purchase needs to be made. With the adequate cultivation, both suppliers and customers can reap benefits.

However, selecting the right preferred suppliers is not easy. Prior to the selection process, companies need to spend the time to understand exactly what they are buying. There are numerous companies with little to no visibility of their purchasing spend.

As an example, let’s investigate office supplies purchases for a moment.
  • Who in your organization is buying office supplies?
  • How many different types of pens and pencils do your office mates purchase?
  • How many different colors and paper weights does your copy paper come in?
  • How much are you paying for office supplies?
  • How many office supply vendors do you order from?
  • How much is desktop delivery costing you?
These are the types of questions one must ask to understand historical demand (both cost and volume.) Purchasing is often more decentralized than one would imagine. Multiple people are buying similar or common goods from the same suppliers without knowing it! With the appropriate spend analysis, companies can better select suppliers to meet their needs.

Supplier selection also requires a comprehensive solicitation. Now that you know what your historical demand is, it is time to share this information with your incumbent suppliers and potential suppliers to obtain their input. They can provide their best pricing on what you buy, recommend standardization opportunities, introduce new technologies, suggest substitutions, improve your ordering process, offer volume discounts, or provide additional services to support your purchases. Through a rigorous solicitation process, companies can find sustainable cost reductions by learning more about one’s own company and about the competitive marketplace.

Need more information?
To learn more about how you can improve visibility into your company spend or how to develop successful solicitations to achieve optimal savings, [Click here] for an overview of our procurement consulting services.

If you would like to speak with one of our representatives right now call (201)944-5580 or [click here] to send us a note.



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