As costs remain high, interest rates climb, and the economy starts to sink, perfecting your company’s purchasing strategy is more important than ever. Master purchasing and you could forge a key that opens the door to lower costs, more supplier discounts, and a stronger bottom line.
However, that door to a stellar purchasing strategy is locked for most procurement leaders. Most procurement professionals don’t have the time or data to craft an effective purchasing strategy.
Are you wondering how to optimize your purchasing strategy? Here are the common factors holding back most companies’ purchasing programs, along with three ways to optimize your purchasing strategy.
What’s holding back the typical purchasing strategy?
Here’s the sad truth: Most companies’ purchasing and procurement teams don’t have the resources to plot out and execute an optimal purchasing strategy. There are a few common reasons why:
- Spending is uncontrolled: Many companies have a rogue spending problem. This occurs when employees purchase from unapproved suppliers. When rogue spend is high, it means employees aren’t taking advantage of the contracts your team has worked hard to negotiate. It can also open your company up to procurement fraud and hidden losses.
- Spend visibility is blocked: Because most companies have limited spend under management, spend visibility is often hazy. That means procurement leaders can’t see the details about spending, such as who the company is buying with, leverage opportunities, delivery information, volume figures, and other important information. Missing out on this info makes it difficult to map an efficient purchasing strategy.
- Time is sacrificed on manual tasks: Many procurement professionals don’t have time to build a thorough purchasing strategy. When you have to manually handle purchasing, approvals, order monitoring, shipment tracking, invoice processing, and more, it can burn the free hours in your day.
- Supplier relationships are weak: A company’s procure-to-pay (P2P) processes often include manual work that leads to errors. Every mistake and inefficiency in the process can prolong payments, and late payments hurt your relationship with suppliers.
How can you improve your purchasing strategy?
As a procurement leader, you have a chance to improve your purchasing strategy and help your company plow through a recession, sidestep layoffs, and speed up its growth plan. Here’s how to improve your team’s purchasing strategy:
1. Use a centralized digital marketplace.
One way to streamline purchases and widen spend visibility is to adopt an e-procurement solution with a centralized digital marketplace. These marketplaces make it easy for employees to shop for goods and services and purchase through approved suppliers.
Because these platforms are easy to use, it incentivizes employees to buy through the marketplace. In turn, you can eliminate rogue spending, increase spend under management, and capture the spend data you need to inform smarter purchasing strategies.
In addition to widening your spend visibility, a centralized digital marketplace lifts your percentage of digitally enabled suppliers. As a result, you can monitor purchasing, track order statuses, and manage your full purchasing plan in a single place.
2. Embrace automation and machine learning.
Automated P2P solutions can free up a procurement team’s workload. These advanced platforms let you submit purchase requests, approve orders, and track purchases in a matter of clicks. Machine learning will also adapt to your P2P work processes and streamline workflows. That all frees you up to focus on more strategic planning.
3. Digitize the full P2P process.
The more human touch points are sprinkled throughout your P2P processes, the more exposed your company is to errors and mistakes. Every error can corrupt the spend data you need to inform your purchasing strategy. By digitizing the P2P process, you can reduce workloads, cut down on errors, and improve the accuracy of your spend data.
Make digital procurement easy.
By adopting an automated P2P solution, procurement leaders can pull in more spend data, create more efficient processes, eliminate P2P errors, and set up a purchasing strategy that pushes the company past tough financial times. Learn more about Vroozi’s Amazon Business integration to see how you can add spend analysis, control, and visibility to your team’s Amazon Business purchases.
