Getting the products your business needs at the price you want is never easy, but COVID-19 has made it particularly challenging for many. With supply chains facing rarely-seen levels of disruption, businesses the world over are looking for ways to optimize and lock down their procurement strategy today.
Efficient procurement is a crucial step in guaranteeing that your business runs smoothly, even when the rest of the world is in flux. Trimming the fat, cutting down on waste, and lowering costs can all have a huge impact on your company’s ability to stay resilient in times like these.
Business leaders looking to streamline their procurement processes may feel as though they’ve exhausted all of their options, but there are almost always a few strategies they can still implement. Here are 6 ways to make procurement more efficient for your business now:
1. Join a GPO
One of the simplest ways to ease your procurement burden quickly is by joining a group purchasing organization. According to whatisagpo.com, group purchasing organizations (or GPOs) leverage the collective buying power of their numerous members in order to strike valuable deals with suppliers, lower distribution costs, or invest in high-tech procurement software.
For small businesses, negotiating with large suppliers can feel daunting. GPOs eliminate the possibility of smaller players getting driven out by larger ones, leveling the playing field for businesses of all sizes. Joining a GPO secures stability for your business, no matter what comes next.
2. Focus on strong relationships
Supply chain management can sound awfully sterile, but it’s actually one of the elements of the business that can benefit the most from strong relationship development. Engaging in relationship-based procurement means utilizing your business and personal contacts to develop your supply chain, leading to more meaningful partnerships down the line.
If the relationship you have with your supplier is based on contractual obligations alone, you’ll never be sure that you’re getting the best deal or the most efficient supply patterns. Connect with people and companies all along your supply chain and figure out how to build those relationships to become mutually beneficial — your balance sheet will thank you later.
3. Be open to new partners
As important as it is to build lasting relationships with the people in your procurement system, you should never ignore the possibility of newer partners that have more to offer you. Always be on the lookout for new nodes in your supply chain, ones that can help you streamline the process.
Finding new suppliers typically isn’t the hard part — it’s finding ones that fit your company’s needs. Determine exactly what is a supplier makes them good for your business and conduct your search based on those criteria. For some companies that will depend heavily on location, others will care more about product variety. In any case, always be open to expanding your network.
4. Embrace tech
Every other aspect of the business has been transformed by technology in the last several years, so why not procurement too? Companies are slow to adopt advanced supply chain management software, but those that do never look back.
Digital procurement tools don’t just make it easier to run your business normally, they can help you work through moments of supply disruption as well. Modern procurement software typically incorporates powerful analytics features, allowing you to develop a detailed understanding of what your procurement strategy looks like and what needs to change.
5. Make a strategy
Procurement isn’t just about getting your business its products — it’s about ensuring that your business is set up for success in all aspects. Creating a roadmap for your company’s procurement strategy can help you determine the role your supply chain can play in your business beyond just supply.
Your procurement strategy should be fully integrated into your business’s overarching strategy; every step you have planned for your company, account for how your supply chain might need to change along with it. This kind of planning can help prevent any hiccups you might experience in your long-term growth plans.
6. Keep things local
If huge parts of the global supply chain are crumbling before your very eyes, it might be best to take that as a sign that it’s time to move your supply chain closer to home. Procuring from companies based in your area can significantly lower shipping costs and make it easier to manage your vendor relationships as well.
The benefits of localized procurement go far beyond mere efficiency. In a tense moment for the economy, supporting local businesses can boost development from the ground up, and buying from nearby vendors can also significantly reduce your business’s carbon footprint. While it may be tempting to gravitate towards blue-chip procurement partners in times like these, supporting smaller players is often the way to go.
7. Look ahead
Business leaders from all industries are sounding the same alarm: be prepared for supply chain disruptions in the future. While events like that can’t be easily predicted, you can optimize your procurement for resilience in the face of downturns and disruptions.
While it may incur some additional costs in the short run, stockpiling some essential components of your business’s supply makeup can protect you from any potential snags in the future. As the world slowly recovers from the economic fallout of COVID-19, the threat of a newer, stronger outbreak is always present. Maximizing efficiency isn’t just about keeping margins low in the present — it’s about ensuring company-wide sustainability as far down the line as possible.
Balancing efficiency and resiliency is never an easy task when it comes to procurement, but businesses need to find a way to do so in times like these. The money your business saves through efficient procurement trickles down through every aspect of your company, ensuring that you’re always as cash-strong as possible. If you’re hoping to keep your supply chain efficient, be sure to consider all of the ways in which you can do so — the future of your business might depend on it.