If a company doesn't know what it already has, it's easy to buy the same thing again — and again, and again.
Overspending is a common phenomenon for big companies.
Unless everyone with buying power is perfectly in line, companies might buy too much, or buy two versions of the same thing — from desks to coffee to software.
But strategic procurement can be fiendishly complex, especially when essential information is trapped in silos across a business, on spreadsheets and in paper records.
This can prevent even the simplest of questions from being answered:
- How much do we spend on product A?
- Which of our suppliers provides the best service levels?
- And which areas are most vulnerable to risk and compliance failures?
It's only by getting clear, up-to-the-minute answers to questions like these that organizations can make more intelligent decisions, reduce duplicate and excessive purchasing, boost their agility and thrive within the digital economy.
There are a number of ways to limit duplicates and overspending:
Making it easy for employees to find what they need and make informed purchases from preferred suppliers within procurement systems - and doing that without excessive administrative time and expense - is also essential for ensuring purchase compliance.
- Make sure all employees with buying power use one system.
- Make sure Finance and Procurement departments work together.
- Make sure items are being used and not languishing on a shelf.
- Maintain accurate, up to date inventory reports and information.
Overspending will persist if management isn't taking a hard look at what they've already bought, or if everyone in the company who can make such purchases isn't talking to each other.
Ultimately, the best way to eliminate waste – whether for a new company, or an existing one that wants to get rid of its duplicates and start with a fresh slate – is to "know yourself."
Learn how you can Become "smarter": Vital steps for strategic procurement