Written by Ephram Stephenson
There is more opportunity in business today than there has been at any time in history.
A variety of industries are growing in Australia. The entrepreneur landscape is ripe for continuing growth, but as with every good situation there are always speed bumps waiting.
Companies of all sizes are dealing with more suppliers and vendors than ever. These new relationships are becoming an increasingly important component of business models. A few inefficiencies in the procurement process can lead to lost profit, lost opportunity and even a lost business.
If you are a business owner, purchaser or manager, it’s your job to make sure procurement is as efficient and cost effective as possible. It will ensure your success even as new competition comes up through the ranks in an attempt to take over.
Here are modern procurement strategies that will lower costs and improve efficiencies.
Niche Vendors and Suppliers Provide The Best of the Best
When you hire a vendor to perform a task for your company do you want a one-stop shop or do you want a firm that has a unique focus on a core area?
It’s a rhetorical question and there are instances when both situations are important (as you’ll see below when we discuss bundling), but niche vendors offer an advantage for companies in the modern economy.
For example, for your paid search ad buying program would you rather have a vendor that provides a full umbrella of marketing services that includes paid search marketing or would you rather have a firm whose only focus is paid search marketing?
Today, with the competitive landscape as competitive as it is, you need a partner with specialties. It’s becoming more difficult to partner with companies that feel they can do it all. When they try to do it all it might work out well for their bottom line in the short-term, but it’s unlikely they will be able to provide the best service.
Niche vendors follow industry trends. They can keep pace with the changing atmosphere and while you focus on other areas of your business they will push to make sure they’re providing the best possible service they can because if they screw up in their area of expertise their reputation will be ruined.
A Global Economy Offers Endless Opportunity and a Need for Systems
Today’s business environment requires businesses to operate with suppliers and vendors throughout the world. Sometimes the best option will be right in your backyard and other times the partner could be located on the other side of the globe.
It’s great that we live in a global world where location loses meaning, but this global economy also increases the importance of having procurement systems in place.
Today, successful companies have systems in place for qualifying vendors. Qualifying measures include capabilities, requirements and other traditional measures, but growing in importance is an alignment of culture and core values.
Companies understand that working with people that have the same core values leads to successful long-term relationships.
It’s no longer about what is cheapest today. Long-term thinking is more important than ever even in this fast-paced world where everyone is connected 24/7.
Outsourcing Recruitment Gets Better Employees Working Sooner
The biggest asset in business today is time.
People don’t have any. Between business, family time and leisure there is just no time for extra effort. This is why it’s so important to have vendors on your team that can save you time with their areas of expertise.
For example, the employment landscape is as competitive as ever. It’s becoming increasingly difficult for companies to find quality talent. And once quality people are on board it’s difficult to keep them because they know they have other options.
For this reason, more companies are opting to hire recruiting agencies.
A recruiting specialist saves a company time and money. They are experts in finding quality people. The recruitment specialist will go through a short discovery process to learn about your company. Again, this is a short time investment on the part of the company because time is precious. The specialist will do his or her own research on the company to understand exactly the right candidate.
Once the discovery stage is over the time saving really takes effect.
Instead of going through piles of applications and hours of interviews you can sit back and continue work as usual. The recruiting specialist will do all this qualifying work for you and once they complete the task they will present you with a short list of ideal candidates.
You can finish the process and choose a person ideally suited for your firm.
Think of what your team could do with all the time saved on checking applications, doing background checks and performing introductory interviews.
That is where you gain real efficiency and lower costs in your business procurement today.
Timeless Procurement Principles
Periodic reviews are common in business yet some companies lack proper review processes.
Even if you feel relationships with vendors and suppliers are going well, it’s still good to review each relationship. This could be every year, every three years or maybe every five years.
Be up front with each partner on this practice at your company. You don’t want to surprise them with reviews and outside research on potential options for improvement. This can put strain on the relationship.
As with anything in life and business, procurement is a balancing act. You want to keep yourself and your partners pushing the boundaries of what is possible while making sure there is a trust and commitment to long-term success.
Diversified partnerships are another timeless procurement principle.
Successful companies know that holding competition in various settings throughout the company can breed better results. This is true for internal employees and for external partners.
In the modern workforce the idea of diversified partnerships might see a company partnering with two or more display ad partners for online display advertising programs. The company can compare the two programs and even if they may be competition against themselves for ad space they can still keep each partner working at full capabilities.
Bundling services is another way to keep costs down in a competitive landscape.
This is contradictory with the previous concept of keeping vendors competitive, but if you’ve had a long relationship with a vendor, you trust them and you feel they provide the best service in the industry you can reach out to them about bundling services.
Suppliers and providers are often eager to increase their business with you and it can streamline your services and cut down on costs in more than one way. The overall cost per service will go down thanks to the bundle price and you’ll also have to dedicate fewer resources to managing the supplier relationship.
Business is more hectic than ever before.
In today’s global economy it’s necessary for businesses to operate at peak performance. Losing money and time is no longer an option. There are too many competitors waiting to take over the top spot.
The procurement strategies discussed in this article are tailored for the modern economy. Some are new trends in procurement and others are timeless strategies.
Follow them and your company will be in a better place to handle all dealings with suppliers and vendors.