Today’s post is by Dave Wenig, Vice President of Sales and Services at SafeSourcing.
Many of our clients find great success in significantly reducing their indirect spend. The typical expense categories that are sourced are always winners and are often the first categories that come to mind when selecting which categories will be sourced using eProcurement tools. As nearly all of our clients know from first-hand experience, these categories have earned this reputation for good reason. The average savings for Supply categories, for example is in excess of 21%. This is relatively well known and is only the start of what is truly possible with eProcurement.
What is less known, and too often overlooked, is that this same eProcurement methodology can very easily be applied to your capital expenditures. At a time when many of our clients are preparing for the coming year, I wanted to point out that you should not forget to leverage eProcurement for your capital expenditures.
At this point, you may well have a very clearly defined sourcing plan in the form of next year’s budget. My suggestion is simple – remember to review that identified spend with your eProcurement provider. You’ll be glad you did.
I would encourage you to also keep an open mind as you decide which of these capital expenses you would identify for eProcurement. You might be surprised to know that our clients have had success in areas where most clients don’t even consider. In one example, we were able to successfully take just one panel van out to market as an RFQ. Inside of days, the client saved many times more than could ever be saved negotiating with dealers using traditional methods. In another example, we achieved 30% savings on two towable generators.
Many of our clients, whether retailers or otherwise, will be working on construction such as opening new stores and remodeling old stores in the coming year. I propose all of that related spend should be sourced using eProcurement. If it is not competitively sourced, you will overpay. Before you build that new carwash, you should know that we do that too. Recently, we achieved over 10% savings on the building and over 34% savings on the installation portions alone for a client.
In this short post, I’ve listed only a few examples out of many, many more and I have not even mentioned your cost of goods or cost of sales. I hope, however, that my main premise was clear. If you have budgeted for capital expenses, you should consider eProcurement to reduce the cost of those expenses. You’ll likely find that you’re able to accomplish much more in the next year based on the savings generated by eProcurement.