When we talk about value optimisation in procurement, we’re talking about the strategic approach of maximising the overall value derived from procurement activities within an organisation over the lifetime of contracts.
It goes beyond traditional cost reduction and focuses on achieving the best possible outcomes for the business as a whole while considering various aspects such as cost savings, cost avoidance, quality, innovation, risk management and sustainability. The goal is to enhance the value proposition of procurement by aligning it with the broader business objectives and contributing to the organisation’s overall success.
When it comes to leveraging procurement to unlock value within your procurement function, establishing a digital-first approach is effectively priming your team to spot and capitalise on opportunities for optimisation.
Let’s explore the ways a digital-first approach to procurement could manifest value in your organisation:
Driving Cost Savings and Profitability
While the term value means so much more than pounds and pence in modern procurement, in a world where costs are only increasing procurement professionals are often tasked with driving cost savings and profitability.
By implementing a software system that empowers your team to strategically source materials, products, and services, organisations can negotiate better deals with suppliers and secure competitive pricing. Effective supplier management and contract negotiations can lead to long-term cost reductions. Leveraging cutting edge procurement tools for expenditure analysis, e-sourcing, and contract management can enhance visibility of your entire supply chain, facilitate data-driven decisions, and drive, manage and track cost-saving initiatives.
Enhance Your Reputation
Ethical and sustainable procurement practices resonate with consumers and stakeholders. A procurement strategy that promotes ethical operations has the potential to boost your brand image and promote customer loyalty, and potentially revenue too. A team empowered with procurement software that allows them to easily spot gaps in your supply chain or processes is primed to prioritise KPIs and equipped to exceed them.
Drive Quality Across Your Supply Chain
The right procurement software must support your team and easily monitor supplier SLAs and KPIs. This would make it much easier for procurement to identify a missed SLA and put recovery and improvement plans in place, thus increasing and maintaining quality supply over time. Your SRM platform must facilitate easy and frequent communication with your suppliers both improving your relationship with said suppliers but also making it easier for your team to communicate concerns or queries. Improved communication prevents issues turning into risks to your supply chain, ensuring quality across your supply chain.
Innovation In Your Supply Chain
It’s not just communication with your suppliers that can be improved by the right procurement software. Effective Supplier Relationship Management can reap many different benefits for your business. If your suppliers feel valued, if there is robust communication in place and demonstrable mutual respect, they are more likely to make your needs and objectives a priority. They are more likely to throw their full weight into considering creative and innovative solutions to the ever-changing challenges facing procurement each day.
Risk Management And Compliance
The landscape of legislation and regulations linked to procurement is dynamic and subject to constant change. Your software must help your team ensure compliance with industry regulations, quality standards, and your organisation’s own internal policies. Your team must utilise supplier qualification criteria when analysing bids and negotiating contracts, increasing access to risk assessment tools and reports all within your platform. With the right software in place, your team can reduce the risk of sourcing from unreliable or non-compliant suppliers, thereby improving the overall quality of goods/services procured.
Digitally transforming your procurement function is a journey which unleashes procurement’s potential to significantly contribute to the overall success and competitiveness of the business. From data-driven decision making through to managing and mitigating risk, equipping your team with the tools they need to ensure your procurement operations can sustainably grow with and support your business.
Are you ready to revolutionise your procurement software and streamline your operations? Reach out today!