Most organizations have a Robust and committed direct procurement procedure. But, indirect procurement is often unstructured and overlooked – it may quietly and pervasively erode the organization’s finances and influence the bottom-line. It is been observed that, improving indirect spend efficacy can help a company save as much as 25 percent. Traditionally perceived as a fixed cost, indirect procurement has to be transformed into a complex, organization-wide, data-driven procedure which can drive cost savings and help a company achieve higher efficiencies. Here are just three best practices that can help in handling indirect procurements effectively:
Implement Strategic Sourcing
Strategic sourcing involves Understanding the purchasing procurement process through fact-based analysis. It takes into consideration the entire cost of ownership instead of just the purchase price and therefore improves the overall spend efficacy. Procurement specialists use the Vendor information obtained through strategic sourcing and implement standardized vendor contracts throughout the organization. The overall savings are enhanced by restricting transactions with preferred providers. Moreover, you are able to leverage the buying power of your company to negotiate best value for your procurements.
Through strategic sourcing, you can specify the principles to validate purchases, place purchasing limits throughout the organization, and proceed to a buy order based system. This guarantees that all of the purchases are tracked and just the requisitions falling inside the pre-defined budget are accepted.
Only by checking vendor Compliance can organizations gain in the negotiated terms. It ensures that the whole purchase requests made under different categories are delivered in accordance with the conditions negotiated at the contractual seller agreements. This permits the negotiated savings to be translated into realized savings. Additionally, compliance Enforcement assists in reducing vulnerability to legal complications and fiscal risks. In the event of non-compliance, the sellers can be held liable for credit and losses can be recovered according to the contract.
Empower Source-to-Pay Automation
Enabling source-to-pay automation optimizes a company’s indirect procurement procedure. The automatic system uses sophisticated analytics; processes and technology to enable strategic sourcing and enhance compliance at each level of the enterprise spend system. With such an integrated system It is possible, collaborate spend information, automate buy and extract vendor invoices in e-format in a systematic and regular manner without administrative intervention thus, minimizing human-error and decreasing the use of paper. The automated procedure is data-driven, intuitive and enables improved user adoption whilst offering real-time spend visibility and insights regarding the organization-wide spending pattern. This improved, fact-based spend visibility enables improved compliance, empowers your company with predictive analysis, and provides insights into market intelligence variables which may be used to get new savings opportunities.