Technology has given companies around the word the incentive to streamline business activities, operations, and systems. Many businesses today are transitioning to cloud based systems like eProcurement that enables them make purchasing easy and effective, while reducing indirect costs at the same time. However, this has led to an increase in investment in software solutions and products. In fact, most manufacturing companies invest about 60% on supplies that can keep their business running, i.e. cloud solutions. Modern economy is more dynamic than it was thirty years ago, which also accounts for the instability. Anyway, the change of the guard from manual systems to automated systems implemented industry best practices that can help in guiding business owners on purchase decisions and using software solutions to success.
Cost drivers are generally the most important aspect in a business when it comes to best practices in procurement solutions. Cost drivers are basically elements that evaluate the total costs of any business process. Once they are identified, business owners can take action accordingly to lower them as much as possible. Additionally, businesses can continue to pursue the elements and assess any possible alternatives that can further reduce their costs. However, most businesses don’t have a clear idea of what cost drivers are, and this hinders their ability to incorporate industry best practices from the beginning.Supplier Relationship
Once the costs drivers are identified, then the best practices can be implemented with the management of the drivers. The first step to implementing best practices is to maintain the supplier relationship. These relationships did not exist in the past and there are many reasons as to why this is true. For instance, buyers used to choose suppliers based on their costs when they needed. And whenever they found a new supplier with lower costs, they would make the switch instantly. Historically, the buyer and supplier relationship has been confrontational to say the least. This approach is rather impulsive, with no long term goals in effect. The industry best practice here is to pick a handful of suppliers who can provide quality materials at reasonable rates. This approach has a long term view of relationship and trust. In the long run, it will allow your business to secure goods and cut down any extra costs and delays that would otherwise go in finding a new supplier every time.eProcurement
Using technology is one thing, but using it wisely accounts for best practice. Many businesses today incorporate complicated and expensive cloud solutions in their infrastructure. This requires extensive training of the workforce, not to mention having to deal with dramatic changes. Before incorporating technology into the business, the best practice is to implement a supply strategy. This gives the business owners a fair idea of what cloud solutions they need for their business. Eventually, the business owner will end up choosing the software that can relate to his/her organization. Overall, by incorporating few industry best practices in eProcurement, you can turn your underperforming business into a growth-oriented firm.
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