Procurement has always been worried about cost, and this is why teams work hard to help their organisations save money. However, today, procurement does not want to achieve cost reduction by compromising on quality. As a procurement professional, you can take measures to help your company enjoy significant savings.
Check out the inventory
You should be aware of the inventory that is there in the warehouse. Surplus inventory translates to money as you have to spend money to maintain and store stock. You have to maintain and store the inventory or it will get spoilt or deteriorate, resulting in losses. You should order just what is required so that you can store it without losing money or incurring high costs.
If you want to have the edge over your suppliers, you need to analyse data so that you get the complete picture of each supplier and the spend. Analysing data will help you uncover hidden costs and expenses that can make procurement expensive without you realising it. Once you discover hidden costs, you can take measures to negotiate with suppliers in such a way that you can do away with these costs.
Make vendor management a priority
It is essential to organise supplier lifecycle if you are looking to get rid of the overheads that you need to manage them. Look to make the vendor onboarding process quick and automate the entire vendor relationship management. By doing this, you can pay more attention to strategic vendors and strengthen your relationship with them.
Switch suppliers if necessary
Often, suppliers with whom you have a long-standing relationship may provide you with the quality you are seeking but at a higher cost. This can add to procurement costs. The way to work towards procurement cost reduction is to look for a less experienced vendor who offers the right quality but at a lower price.
You will need to have a multi-pronged approach to bring about cost reduction in procurement, and these are some of the ways that you can do it.