To operate smart, organisations need to be good at procurement. Those that can demonstrate themselves to be effective buyers are those that pull ahead. Indeed, the Hackett Group found in ‘Five characteristics of world-class procurement organisations in 2014’ that the top procurers reduced their labour, outsourcing and technology costs by 1.6 per cent in 2013. This means funds can be redirected to other value adding activities.
But how can you excel in procurement and become an effective buying organisation? Achilles’ tips for best in class procurement functions shine a light on some of the behaviours companies need to effect in order to improve their buying operations. Here are our top tips on how to be a good buyer.
Get to grips with data
Data is a powerful thing and organisations that can harness it effectively can identify potential efficiencies, ensure supply chain compliance, target cost savings and draw on innovation. Using supplier management tools, such as the solution offered by Achilles, it is possible to utilise data to enhance every function.
Hackett Group found that world class procurement organisations have the tools to turn data into actionable knowledge. Eighty-nine per cent of high performing companies have a significant level of information available compared to just 43 per cent of those not classed as best in class.
Achilles Supplier Management is our supplier pre-qualification and risk management solution that gives buyers information on all current suppliers that subscribe to a given community in order to identify those to do business with and manage companies in the supply chain. This means buyers can identify areas of risk and potential cost savings.
Know how to minimise risk
Part of being smart when it comes to procurement is knowing how to effectively manage risk. Hackett Group observed that world class companies have formal risk management programmes in place to ensure supply continuity and compliance.
Risk comes in varying guises, from supply chain delays to instances of slavery. Buyers need to recognise them all, identify how to unearth threats and ensure mechanisms are in place to prevent them.
Key to reducing risk is ensuring there is visibility through supplier management and mapping, both offered by Achilles. By ensuring all those in the supply chain can be tracked and independently verified, threats are much easier to identify and avoid.
Tap into innovation
In order to elevate the buyer function, procurement professionals need to demonstrate that they can help drive innovation if they want to be a good buyer. This is done through suppliers and the best buyers know how to tap into the innovation capacity of those in their supply chain.
Small and medium-sized enterprises (SMEs) are particularly known for their innovation capabilities, not to mention their responsiveness. Organisations that pursue policies of supplier diversity will be able to draw on the benefits offered by SMEs.