Make Procurement a Priority to Achieve Significant Cost Reductions in 2012

A wise New Year’s resolution is to assess how more can be done with existing resources. This is certainly true as organizations continue to look for ways to squeeze every penny out of every dollar. One proven way of maximizing resources is to save on goods and services through the purchasing process, according to William Gindlesperger, chief executive officer of e-LYNXX Corporation, a leader in procurement innovation.

Often relegated to back-office operations, procurement has earned its place at the strategic decision-making table of any organization that wants to improve its bottom line. According to the most recent survey of chief procurement officers by Capgemini , 79 percent of chief procurement officer respondents stated that procurement must be more focused on “improving an organization’s bottom line.” The Capgemini survey also found that more than 70 percent of purchasing functions now report directly to boards of directors and more than a quarter report directly to chief executive officers.

Given the growing importance of procurement, Gindlesperger said there are some basics that must not be overlooked to establish a cost-effective and efficient program:

• Plan properly - Consult with departments within the organization to determine projected needs, timetables, quality and quantity requirements, budgets and frequency of orders. Inadequate planning will lead to problems. Centralize purchasing of similar items where possible.
• Assign accountability - Establish roles and responsibilities so all know who is responsible for such key decisions as quantity, quality, design, deadlines, final approvals, etc. Get as many decision-makers as possible involved in the planning process so all bases are covered from legal to shipping.
• Ensure transparency - Make sure all participants in the procurement process, internal and external, know that procurement ethics will be applied to ensure fairness and avoid favoritism or any relationship that may seem questionable.
• Be legally compliant - Be meticulous with all contracts, orders and licensing agreements so ensure that are legally sound with every client before the procurement process is initiated.
• Welcome innovation - Seek new approaches to procurement that were not available just a few years ago. New procurement technology, such as automated vendor selection technology, is reducing the cost of custom goods and services by an average of 42 percent.
• Be clear - Communicate is a way that is easily understood and in a way in which all participants are informed in a timely manner about key decisions, tasks, quality, quantity, deadlines, changes and delivery.
• Establish payment terms - Do not leave anything to chance regarding how payments to the successful vendor are to be calculated once they have been awarded the contract. Make payments on time.
• Document everything - Ensure that the whole process is adequately documented and recorded to demonstrate the decision-making processes to others. This contributes to full accountability by all involved and serves as an archive for reference with future similar jobs.