Bulk Quantities - The higher the order quantity the more leverage you have to bargain on pricing, but only order in bulk where beneficial to have the extra stock.
Cost Avoidance - eg: Lock in good rates for a fixed period, avoiding any market increase etc.
Develop an awareness of savings opportunities, so none are missed!
Educate vendors on potential quantities you may order over time, so they can quote to suit.
Freight Spot-Quotes - Put a policy in place that a spot-quote must be obtained for any larger freight, even if you already have great rates in place! This can save thousands!
Good price checking procedures to ensure not being overcharged on invoices by suppliers - eg: 3-way check
Have purchasing cards for low spend/low risk purchases, saving money on processing time.
Information Accuracy and Completeness - eg: naming conventions, adequate detail - allowing Procurement to shop around with little hassle, and get the best savings.
Justify purchasing decisions with an evaluation process (quick or extensive evaluation depending on value/risk level), so you consider all factors and therefore make quality decisions.
Keep an eye out for maverick spending, and put in processes to stop it. eg: All purchases have an approval process, and must go through the ERP inventory system which links materials to preferred vendors/contracts. Overcome objections from personnel who want to keep buying from their regular supplier despite paying a premium. Show them the potential savings so they understand the costs of their decisions.
Limits of approval regarding purchases - eg: purchases over $15000 are to be approved by a Manager etc, puts controls in place to stop inappropriate spend and errors.
Material Resource Planning (MRP) - ensure good MRP processes are in place, so money is saved by a: not running out of critical inventory and b: not tying up cash in over-stocked inventory.
Negotiate prices and supplier costs to achieve best possibly savings! And don't forget good internal negotiation with stakeholders and peers, otherwise your savings initiatives may never come to fruition.
Offer the appropriate feedback to unsuccessful bidders in an RFx process. This will allow them to work on their weaker points and potentially offer a more competitive bid on the next round.
Process Improvement - eg: finding quicker and smarter ways of processing transactions in your ERP system, so focus is spent on value-adding activities.
Quotes from at least 3 suppliers when going out to market.
Risk Analysis - to mitigate or eliminate any costly occurrences. eg: risk of not receiving bottleneck items in manufacturing
Spend Analysis - look for too many suppliers in one category, look for price creep, look for large spends in a category with no contracts in place, look for large amounts of separate invoices from one supplier etc - take action!
Technology - eg: to save time and money utilizing technology - e-procurement, cloud computing, Electronic Data Interchange, e-tendering
Utilize existing contracts - reduce leakage
Vendor Relationship Management - working with suppliers can realize benefits such as shorter lead times, priority access to stock etc
World-Wide Sourcing - because it’s a global market, not just a domestic one
EXcercise good contract management and review - Opportunities await! eg: A supplier may substitute contracted items for ones that give them higher margins. Good contract management can keep on top of this happening and/or allow for better savings.
WhY pay premium when a lower specification will do the same quality job?
Zero Purchase - When NOT purchasing is a better option
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