Optimizing the procurement process
In purchasing there is high potential for savings for companies through partnerships, better processes and contracts. By this way a company can achieve savings in purchasing, reduce inventories and risk.
We can help you to improve your processes in purchasing. If there is need, we can restructure your purchasing department.
There is need for rules who can order what and when. The approval process should be lean so that the process remains being effective and practical. It should be ensured that the control function can be carried out in a meaningful way.
Specialist departments and purchasing should work together and support each other. The purchasing department should have a basic technical understanding to purchase effectively and invite successfully for tenders.
Often it is difficult to determine which department is responsible for the inventory in a company. In any case purchasing has to mind inventory levels. Replenishment lead time, actual and consigned inventory, safety stock and lot sizes have to be considered. A collaboration of the involved departments also increases effectiveness.
A division into strategic and operative purchasing is common and reasonable. Strategic purchasing establishes partnerships with suppliers and provides contracts as a basis for the operative purchasing.
We can help you to evaluate existing partnerships, establish new ones and bring your contracts up to date.
Strategic purchasing is responsible for partnerships and contracts. By analysing commodity groups, we can identify potential for improvements.
Reliable, long-term relationships with suppliers are important for a successful cooperation. But attention must be paid to certain points and facts on a regular basis. Are the business conditions still the same? Do your suppliers still suit your company with their processes, characteristics and potential for growth? Are the prices you pay still fair market value? Is there a risk assessment for our supplier? Is there a risk of insolvency of your supplier? If there is only one supplier for certain products and services there is a risk of shortages when a supplier has delayed deliveries. It can take a long time to establish an alternative supplier even so when an approval process is concerned. Can you combine demands from several departments or subsidiaries to generate a bigger volume and archive better conditions for purchasing? Are the contracts up to date? Do you purchase according to your conditions of purchasing and does your supplier pay heed to your code of conduct? Other important issues include general purchasing conditions, warranty and guarantees.
Not only because of these considerations, it is advisable to have a healthy supplier structure and to have more than one supplier for critical products. Competition also helps to motivate suppliers to perform better.
A low priced yet reliable supplier can also come from abroad. International sourcing ca be worthwhile and we help you to negotiate successfully contracts in international law.