Most companies understand that lowering their cost of goods provides the greatest benefit to their bottom line
Most companies understand that lowering their cost of goods provides the greatest benefit to their bottom line, but they face significant challenges in trying to do so. So, why do some companies succeed while others continue to implement program after program with no measurable benefit. First among these is the recognition that effective e-procurement initiatives like any successful program requires strong support from executive management. This is important because Retail as an industry lags well behind other industries in utilization rates of e-procurement tools. So at a minimum in order to get off on the right foot, this typically means the CEO, CFO, CLO or CPO sponsorship is critical. Once this directive has been issued, the next step is to identify savings targets across all corporate spend categories. Once these targets are identified and ranked, a category specific attack plan can be developed that best maximizes savings opportunities. It is important to note, that savings alone do not create a successful e-procurement plan. What can not be sacrificed in the name of cost reduction is quality, which can include safety as well as Corporate Social Responsibility (CSR) goals including environmental support programs.
However, a key challenge for any procurement organization directed to implement e-procurement tools across all of their unique spend categories, is to not over complicate the process into something that you can’t maintain. At a high level, the following steps will insure that you are headed down the right path.
Identify all opportunities
Develop a total company strategy
Source qualified suppliers
Negotiate final terms
Award of business
Most quality e-procurement organizations have well developed plans that will aid you in implementing your best practices while maintaining quality and supporting your CSR initiatives.
I look forward to your comments.