Procurement is typically a big part of any business and the root of many saving possibilities. You are deeply dependent on your suppliers and should carefully consider any changes in that department before acting. However, there are many ways, in which you can save money on procurement while not losing, but maybe even gaining, effectiveness. For this reason, we have compiled a list of our top 5 tips on, how you can save on procurement costs.
Effective Negotiation
Knowing how to negotiate with your suppliers is absolutely essential for keeping costs at a minimum. Study the art of negotiation, train your staff extensively on the matter, and make sure you walk into any business negotiation meeting fully prepared to get the best deal possible.
Minimise Delivery Costs
Delivery costs make up a large part of most business’ overall procurement expenses. For this reason, it is very important that you pay attention to the delivery costs for any given supplier. Consult with as many shipping companies as possible to find the best price possible for the best service.
Review Terms and Conditions
Reviewing your supplier’s complete terms and conditions is very important to make sure, there are not any hidden costs or conditions. Other than that, make sure there is a Master Agreement in place with each supplier – perhaps allowing for bulk discounts or discounts after a certain time period of collaboration.
Bulk Discounts
Many or most suppliers are open to negotiating some sort of bulk discounts on their products or services. You should negotiate this with them, as this can save you a lot of money in the long run, once you start to scale.
Train Staff
Another very important aspect of supplier management and cutting procurement costs. Train your staff in managing suppliers and in cost effective purchasing. This will not only give you more overall competent procurement workers, but it will also cut your costs a lot in the long term.
Moving your Negotiations and Procurement Online
eAuctions have risen a lot in popularity since they first surfaces in the 1990s. They provide a platform, where suppliers and buyers can negotiate prices on an online platform. This provides both parties with a much larger variety of choice, which will ultimately provide everyone with a substantial discount. Buyers can bid on different suppliers’ offers and make sure, they get the best deal for their dollar. On the other hand, suppliers will offer their service or product and can be sure they will get the highest price possible. That is the beauty of an online auction. If you want to check out an eAuction platform, click here.
Make sure you are not Buying Duplicates
A great and easy way to cut down excess procurement costs is to make sure, you are not buying duplicates. This can be done with some simple supply management. Have a system in place, which ensures you are not purchasing the same product from different suppliers. This is not only an unnecessary cost, but sticking to the same supplier will most likely also provide you with considerable discounts, which can save you a lot in the longer term.
