Four Best Procurement Practices

An effective procure-to-pay process is the ultimate secret to doing business in recent times. With the cost of purchasing rising steadily, organizations need to give priority to the procurement management system. Since procurement takes up a large part of the overall spend share, a majority of organizations have started to regard an efficient procurement management system. Considering this, it is still important for these organizations and others to undergo a complete revamp of the procurement practices to keep pace with the organizational demands. The Ethiopia sourcing professionals top the list of sourcing countries that have effectively started to look beyond manual procurement practices.

Here is a list of the best procurement practices an organization needs to follow to have a positive influence on the cost-income ratio.

Optimize interaction among supply chain managers and employees

To run your business successfully, procurement officers need to work jointly with the supply chain managers. The officers must work in relation with the logistics and other staff - both outside the supply chain and inside the organization. Lack of communication among employees and managers is the primary reason behind a failed promise delivered on a well-negotiated contract. This mainly happens with the rebate deals. Organizations look for the need to provide complete visibility and transparency among various processes and systems, especially when buying stocks in large amounts. A lack of interaction and complete visibility can result in missed rebate thresholds. The result is increased cost of products than was envisaged. Therefore, every party involved in the procurement process providing global procurements services must be aware of the mechanical agreements.

Leverage technology

A procurement organization needs to have access to solid and accurate information to function properly. Having said this, the procurement managers need to have data based on which they can make informed decisions and start negotiations with suppliers. This can only be achieved when procurement organizations will have advanced technologies in place. These technologies will allow managers to remain informed about item usage, waste percentage, sales, supplier information, forecasted needs, production problems, and more. Likewise, contractual information will be needed by the employees managing sales and logistics to calculate the optimal quantities of orders and obtain the rebates and best discounts based on the information. Getting out to tender means having the right technology in place. The tender processes can become more efficient if a technological barrier is placed between the procurement team and suppliers at the right time.

Apply cross-functional knowledge

A procurement leader aimed at providing global procurement services must have extensive knowledge in procurement, finance, R&D, and production. AT Kearney suggested this valuable point in the study of ‘How to Become a Procurement Champion’. There is a very obvious reason behind this suggestion. You see, maintaining the profit margin of the business and taking out the cost is not always about reducing spend. If you keep compassionating a particular item for a very long time, it is very obvious that you will reach a cost plateau. Then it will become difficult to go below this price without making any clever thinking. This is exactly where you will require the knowledge of production processes. The procurement leaders having extensive knowledge about procurement as a whole will be able to learn about the latest technological innovations and practices from other industries.

Associate with strategic suppliers

Associating truly with the suppliers will require you to think beyond supplier relationship management processes. Maintaining a strategic relationship with your suppliers will need you to become the customer that your supplier goes in for with some of their best ideas. Having the best-in-class procurement team means they can manage to have their supplier’s inside track. This way they become aware of the newest innovations about to be launched in the market and obtain this knowledge to keep a track of the supplier’s industry. These alliances along with increased interactions among departments and having efficient cross-functional knowledge put organizations with the procurement teams ahead of their competitors.

These are some of the best procurement practices followed by various sourcing destinations, including Ethiopia sourcing organizations. Passionately performing these procurement practices can lead to a reduction of cost and mitigation of risk creatively and innovatively.