A crucial component of supply chain management in today’s business arena, strategic procurement has evolved to the point of becoming a need for organizations. In simple words, the term refers to the continuous improvement and re-evaluation of the purchasing activities of a company. Popularized by big-name business consultants in the early 80s, strategic procurement has now become the norm in the purchasing departments most firms. So how does a firm really achieve strategic procurement? Let’s take a look.Enhancing Supplier Relationships
If one intends to evaluate and improve on all aspects of procurement on a long term basis, supplier relationships suddenly become much more important. When it comes to strategic procurement, the company must think of the impact on procurement on a long-term basis. The better relationships you build with your suppliers, the larger benefits will you be able to reap over an extended period.
Enhancing supplier relationships requires a lot of work though, which is why the industry uses specialized tools to make the process easier. Web-based purchasing software is one such tool which has completely changed the face of strategic procurement as we knew it. A company can easily keep track of all the information regarding each vendor if all purchasing is made through one system, thus making it easier to know the best way to manage relationships with each supplier.Identifying and Delivering Bottom-line Saving
Procurement and expenditures go hand in hand. If you can streamline the procurement process, costs savings are bound to follow. Strategic procurement centers on timely identification of all possible saving opportunities, and delivering bottom-line savings for the organization. Through usage of web-based purchasing solutions, the company can leave the process to the software. Current e-procurement solutions are able to deliver huge cost savings through a variety of ways.
Freeing up human resource
Eliminating errors thus saving on wastage
Better buying price and service from suppliers due to efficient communication
Control on maverick spending by preventing unauthorized purchases
These are just some of the ways web-based purchasing software can help deliver savings; many more exist.Pruning Supply Base
When it comes to sourcing and procurement, a company must strive to retain only the most effective and efficient suppliers and prune away the rest. Having few but dependable suppliers helps keep the costs to a minimum, while ensuring high levels of service quality from the vendors. By analyzing the performance of each supplier through web asset management modules in e-procurement software, managers can easily determine how to maintain an effective supply base.Formal Program for Supplier Management
Handling procurement challenges is no mean feat. Most of these hurdles usually stem from the lack of a formal program for supplier management. E-procurement software can help out even here, as the more upscale offerings of such solutions contain entire supplier management modules in form of a formal program.
At one point in time, strategic procurement required intense focus and dedication on the company’s par. This isn’t to say it’s a piece of cake now, but it certainly has been made easier through procurement software which accomplishes many of the objectives of strategic procurement.
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