“Most procurement departments have have to deliver savings on an ever-increasing portfolio of goods and services with too few skilled resources,” says Alan Low, MD of procurement benchmarking service Purchasing Index (PI).
“Compounding the problem of time is the culture of consensus which
results in a high number of daily meetings and workshops.”
He tells SmartProcurement that: “In many
cases, we find that people are even too busy to fully utilize the
supply information that they have at their disposal, let alone research and
collate external, relevant information which would assist them in
delivering their targets.
“Our more pro-active clients utilize the following processes to get the maximum value out of our reports and market intelligence in general,” he says.
Obtaining information – Get it right in the SLA
“Many of organizations allow their suppliers to provide them with very little or no information. When information is provided it is often in the wrong medium (i.e. fax rather than email) or requires the customer to do further analysis to make it usable. PI firmly believes that the Service Level Agreement should clearly stipulate what information you, the user, requires, how often and in what format. Bonus marks can be awarded for suppliers who can integrate this information into your own management information systems.
“Because of the above and other work pressures, information is often not reviewed and acted upon promptly. Timing is everything not only because information becomes redundant very quickly but also because savings delayed equates to money spent unnecessarily (and it usually cannot be recovered).”
Using information – disseminate to teams
“When we present our benchmarking reports on a particular commodity or service to a number of our clients, they assemble a team made up of procurement, technical (where relevant) and users to hear the feedback, question us further and decide, there and then, specific actions, responsibilities and timescales. This ensures that prompt action is taken to drive out value and make savings, not only in the user-supplier relationship but also within the organization. Changing internal processes and behaviour can often, in PI‘s experience, be the most important way to make savings. There is nothing more rewarding for our analysts than seeing a client make savings as a result of our reports.”
Spreading the word
“Purchasing departments are notorious for keeping information to themselves and not sharing it within the organization! And yet to make savings the users (Purchasing’s customers) often have to be involved to reduce consumption, change behavior, etc. Not only does involving the users create a sense of co-ownership of savings initiatives but it also provide Purchasing with a unique opportunity to market its value within the organization,” says Low.
Alan Low is Managing Director at Purchasing Index. He can be contacted on +27 84 890 0005 or firstname.lastname@example.org