4 quick wins to drive immediate savings across your procurement function
Published January 25, 2011 | Ultimately no two organisations are the same and the quick win opportunities will depend to some extent upon your maturity within your procurement processes and progress made to date. However, our experience suggests that many organisations have opportunities to drive significant savings by simply putting in place basic supplier engagement principles.
The four ideas outlined below provide most organisations with tangible benefits within a short timeframe;
1. implement a central supplier directory – this provides the informational foundation to improve virtually every procurement activity. Besides providing a single view of all suppliers, it enables you to;
- eliminate redundant suppliers and processes
- improve procurement and finance productivity
- enable better supplier categorisation and spend analysis
- deliver savings by removing duplications
2. Strengthen supplier qualification and contract review processes – a good procurement system will support streamlined processes that can quickly;
- identify existing supplier risk so steps can be taken to mitigate it
- reduce risk and associated costs going forward
- automate the supplier review process
3. Perform a supplier rationalisation process and establish corporate contracts – Once you have a central database of suppliers, the logical next steps is to strip out duplication. Spreading your spend across too many suppliers dilutes your buying power, whilst maintaining just one relationship may increase risk of failure. A supplier rationalisation process will enable you to;
- reduce the overall cost of purchased goods and services by negotiating better value
- lock in longer term savings through corporate contracts with preferred suppliers
- reduce the risk of relaiance on just one supplier
4. Deploy a supplier portal – this provides significant savings in administration costs and enables streamlined processes to;
- automate the upfront supplier evaluation
- reduce supplier onboarding effort
- reduce sourcing effort
- reduce purchase ledger activities
Overall, these are just some of the ways that you can deliver very short term benefits and realise immediate financial impact on your bottom line.
The role of the CFO in Strategic Procurement
Published January 25, 2011 | The Chief Financial Officer has a significant role to part in the development and implementation of a strategic procurement philosophy.
The functions that the procurement function performs – supplier management, sourcing and contract management – are often referred to as strategic procurement. However, by working in partnership with the procurement function, the CFO can better understand and leverage strategic procurement in conjunction with other spend control initiatives, to deliver positive impact on the bottom line.
The CFO role is thus;
1. work hand in hand with the senior procurement people
2. use their sphere of influence to gain organisational support for strategic procurement
3. help with the refinement and implementation of procurement policies to drive savings
4. help guide the application of enabling technology
UK PLCS HAVE £60BN TIED UP IN UNPRODUCTIVE WORKING CAPITAL
Published January 21, 2011 | Analysis from Deloitte, the business advisory firm, shows that UK plcs are sitting on £60bn of unproductive working capital.The study highlighted that working capital is unnecessarily being tied up in a myriad of simple transactions.
Deloitte’s Global Review of Working Capital analysed data of more than 20,000 companies from across the globe over a five year period. Unproductive working capital was found to be tied up in basic accounting cycles, for example in the manner in which accounts receivables and payable processes are being handled. Inventory and supply chain management were also noted as a key factor underlying poor working capital management.
What does this mean to your business?
How can you release some of this capital to drive your growth?
Call us now and we’ll be happy to assist you to do just this.
Analysis from Deloitte, the business advisory firm, shows that UK plcs are sitting on £60bn of unproductive working capital.The study highlighted that working capital is unnecessarily being tied up in a myriad of simple transactions.
Deloitte’s Global Review of Working Capital analysed data of more than 20,000 companies from across the globe over a five year period. Unproductive working capital was found to be tied up in basic accounting cycles, for example in the manner in which accounts receivables and payable processes are being handled. Inventory and supply chain management were also noted as a key factor underlying poor working capital management.
What does this mean to your business?
How can you release some of this capital to drive your growth?
Call us now and we’ll be happy to assist you to do just this.