Today’s post is from our archives at SafeSourcing.
Many of the organizations we speak with believe they handle their purchasing reasonably well, either with their existing internal processes or without any eProcurement tools at all. These companies may even realize savings as they negotiate with their vendors. That’s said; very few of these organizations are doing as well as they should, given the wide availability of eProcurement solutions and/or the ease of use available with full-service SaaS options.
Here are my top 5 signs that your organization is not maximizing the savings potential by using only a traditional procurement process.
- You only seek quotes from 2-3 vendors. Historically, our data suggests that having 6-8 suppliers quoting drives the highest possible savings.
- You haven’t competitively bid a category in the last 3 years. It is at this point that we find a category should be sourced, including non-incumbent vendors, to ensure you are still receiving the best market prices.
- You don’t have easy access to your existing contracts. If you don’t already, you should implement a contract management tool. Too often, we see organizations unsure of contract terms and key dates falling victim to unfavorable auto-renewals.
- You do not have a set of specifications for the category. This is both common and fixable and places the incumbent vendor in a place of perpetual power in negotiations.
- You’re not using eProcurement. As well as your organization does when negotiating, we see significant increases in savings, often 10-20% more, when our clients use their eProcurement tools effectively. One client recently admitted that they would never have asked for the prices or discounts that we deliver for them. Each of the four preceding signs is also an indicator that you’re not using eProcurement. In fact, by implementing a strategic eProcurement program, you’ll likely resolve one through four organically.
Do you see any of these signs in your organization? If so, take steps to correct and you’ll see immediate, measurable results. For more information, please contact SafeSourcing.
We look forward to your comments.