7 Ways Strategic Sourcing Helps Requisition and Procurement

Improve Requisition and Procurement with Strategic Sourcing

As your company grows, there will be a time when it’s essential to review your operating costs to finds ways to increase revenue. One area of requisition and procurement that yields significant results is strategic sourcing to optimize your cost for suppliers of materials and services. Strategic sourcing is the process of negotiating supply channels at the lowest total cost, not just the lowest purchase price. We help companies take the key elements of strategic sourcing and apply them to the tactical day-to-day tasks that your requisition and procurement department engages in every day – tasks like sourcing items and negotiating pricing and terms. In our continuing series covering basics of procurement, we identify ways you can act strategically when identifying sourcing, pricing, and terms in your company’s procurement cycle. Let’s review seven ways strategic sourcing helps minimize your costs and maximize your profits.

7 Benefits of Requisition and Procurement Strategic Sourcing

1. Research Multiple Suppliers - It may seem obvious to research and evaluate more than one qualified supplier for a product or service, but it’s often overlooked. When you already have qualified suppliers as a backup, you are prepared when one vendor runs low on stock, unexpectedly raises prices, or can’t deliver within your timeframe. It’s important to have options to negotiate the most competitive prices and terms.
2. Consider Vendor Contracts - Whenever possible, consider issuing a master vendor contract to your major suppliers, so they are contracted to supply your products at the prices and terms agreed. With a vendor contract in place, you can track committed amounts and quantities against the master contract and manage the approval process should those limits get tested.
3. Nurture Supplier Relationships - It’s easy to think of vendors simply as the necessary intermediary between you and the products and services you’re procuring — a combative relationship where your goal is to pay the lowest price and theirs is to charge the highest. However, if you think of your suppliers as partners in your business, you stand to benefit when the relationship becomes more collaborate than combative. When you partner with your vendor, you can encourage the vendor to increase quality and service, and the vendor knows that by doing this they will see a renewed contract with guaranteed sales. To build partnerships, start by negotiating fairly and openly, paying them promptly according to terms, strategizing with them about sourcing new items, sharing your purchasing forecasts, and asking for their recommendations on ways to lower costs.
4. Develop Preferred Supplier/Product Lists - In general, the fewer suppliers you deal with, the lower your costs will be overall. By consolidating your purchases with a smaller number of suppliers, your buying power increases, enabling you to negotiate the best possible pricing and terms. In addition, procurement and supplier management costs are reduced when you have fewer suppliers to manage. Once you’ve negotiated pricing with your preferred suppliers, arrange the items into catalogs or shopping lists to make it simple for employees to locate them.
5. Centralize Purchasing - Centralizing purchasing tasks across your organization also serves to lower overall costs. With higher transaction volumes, your buying power can be fully leveraged, and here again, you’ll lower procurement and supplier costs by consolidating the purchasing function.
6. Incorporate Technology - Technology has a leading role to play throughout the procurement process, including sourcing. Technology tools such as eProcurement software empower you with the functionality, workflows, and controls to design and enforce your strategic sourcing strategies.
7. Smart Sourcing - A smart approach to sourcing, pricing, and negotiating terms systematically looks for savings at every touchpoint, providing the company with a competitive advantage. We’ve just scratched the surface of a complex topic here. If you have questions about how to make your company’s procurement cycle a strategic part of the operation, contact us.

If you are interested in learning how to improve your requisition and procurement processes, contact us – email, call 800.725.4408 or visit - www.paramountworkplace.com.

We look forward to learning about your unique company workflow and requirements and how Paramount WorkPlace can specifically help you achieve your objectives. 

Let’s connect and let’s start today!

Paramount WorkPlace

Paramount WorkPlace develops, sells, and supports advanced web-based and mobile requisition, procurement, and expense software solutions for mid-market and enterprise companies. Over 131,000 worldwide users trust and rely on Paramount WorkPlace cloud-based and on-premise solutions for their powerful capabilities, intuitive features, and the option for a stand-alone and integrated extension of Microsoft Dynamics GP, AX, NAV, and SL; Sage ERP 100, 300, 500, Sage Intacct, Blackbaud Financial Edge and NXT, Acumatica, NetSuite, SAP, Oracle, and Epicor. Learn more at www.paramountworkplace.com

About the author:
Salim Khalife is the founder, president and CEO of Paramount WorkPlace, a technology company that develops, sells, and supports advanced web-based and mobile requisition, procurement, and expense software solutions for mid-market organizations. The company introduced its first cloud-based SaaS requisition application in 1997 and continues to innovate and expand its partnerships and integrations ever since. 

Another version of this blog was previously posted on Paramount WorkPlace’s Blog by Salim Khalife, Founder & CEO - Putting the Strategic in Strategic Sourcing

Image courtesy of freedigitalphotos.net by Stuart Miles