Is Your Business ready to Take Purchasing to the Next Level?

How do you know it’s time to level-up your purchasing practices and embrace a strategic and systematic approach to sourcing goods and services???

Business owners recognise procurement's strategic importance, but struggle to identify and address inefficiencies in their purchasing processes, resulting in wasted time, resources, and money. Common issues signify deeper bottlenecks, caused by various factors. Addressing these bottlenecks is crucial, as every lost hour sets the business back. However, with the right approach, purchasing can be improved, blockages cleared, and lost resources regained. Let’s begin.?

Common Indicators Your Business is 'Procurement Thinking' Ready

Businesses across the globe that have adopted a procurement mindset invariably identified commonalities that motivated them toward transformational change. High on the list was a desire for cost savings, a need for better stock and supplier management, an awareness of the negative environmental and social impacts of current purchasing decisions, a need for process efficiency, and a strategic imperative to innovate to stay ahead of the competition.?

They saw the signs that led them toward change. And if the following indicators sound familiar to you, it’s likely your business is ready to move to a procurement thinking approach as well:?

• Stock shortages are leading to delays and missed delivery deadlines.?
• Customer complaints have increased, customer satisfaction has decreased, and customer loyalty is suffering.?
• Suppliers and logistics provider partners are performing poorly.??
• Excessive inventory is tying up cash flow and warehouse space.?
• Idle equipment still requires maintenance and storage adding to production costs.?
• Process workflows and approvals are causing delays in supply chain management and reducing productivity.??
• Administrative workloads are high and there’s a backlog in processing accounts.?
• Additional shop floor personnel are required to navigate and alleviate production bottlenecks.?

A poor DIFOTQ rating is a strong indicator your business needs to make changes to improve supply chain performance, customer satisfaction, cost efficiency, and operational effectiveness. A procurement process that is well-designed however, provides increased control over purchasing, enabling your business to accurately plan and forecast its expenses.?

How Costly Can Manual Purchasing Processes Be?

Manual procurement processes are costly for businesses, causing delays and inefficiencies. We conducted an analysis of a medium-sized manufacturing business and found that their Purchase Ordering process had nine inefficient steps, leading to delays and higher costs. The purchase requisition creation and approval process was disorganised and time-consuming, with multiple layers in the approval chain causing delivery delays. Purchase orders had to be manually created and sent to suppliers, adding further delays. These inefficiencies cost the business approximately $172,000 per year, or $860,000 across five years.??

This analysis was limited to the Purchase Ordering function alone and illustrated inefficiencies and manual handling practices had a significant impact on the business's bottom line. When you factor in the effect of inefficiencies within other requisitioning and purchasing functions you can begin to see just how costly manual processes can be. Similar costs could be present in other businesses.?

To address this, we recommended digitalising, streamlining, and automating the entire procurement process of the business through Enterprise Resource Planning software with integrated requisition management tools. This resulted in meaningful efficiency gains, greater control and visibility over spending, resource wastage reductions, and resulted in significant cost savings throughout the business.?

If your business is ready to take purchasing to the next level, connect with us today and find out how we can support your business to change and thrive.?

Interested to Know More?

Find the full article on this topic here , and other LinkedIn articles to date in our 'Moving from Purchasing Thinking to Procurement Thinking' series below:

• What is ‘Purchasing’ and how is it Different to ‘Procurement’? ?
• What is Procurement Thinking??

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