This article was written by Managing Consultant, Bryan Schriiffer.
Gaining a Competitive Advantage Over Your Competitors
One of the major areas where companies stand to save a considerable amount of money is in procurement. Though most organisations understand the importance of procurement, the majority of them have not optimized their purchasing in such a way that ensures they’re maximizing their bottom line.
This means that organisations that are able to get their procurement house in order stand to gain a competitive advantage over their competitors. Studies show that half of procurement spending is not analyzed as thoroughly as it should be. This has resulted in typical large-sized organisations losing millions each year.
Few companies can absorb losses at that level. The good news is that when procurement is managed the right way, these significant financial losses are avoidable. A large number of organisations believe procurement is all about getting goods and services at the cheapest price, however getting the cheapest price does not always deliver the best outcome.
Procurement is defined as the process of finding, agreeing terms and acquiring goods, services or works from an external source, often via a tendering or competitive bidding process. The process is used to ensure the buyer receives goods, services or works at the best possible price, when aspects such as quality, quantity, time, and location are compared. These factors, along with being fit for purpose and ongoing supplier relationships, are just as important as cost.
“An organization not only needs to increase its revenue, it needs to manage its costs and reduce its expenses, but that can be easier said than done. It can be tricky to realise the true promise of procurement for a number of reasons. Perhaps most significantly, a number of organisations lack enough visibility into their corporate spend”. When you don’t know what you’re spending in the first place, how can make well-informed decisions to manage your business and improve profitability? (source: www.erequester.com)
Organisations that lack procurement visibility can lose large amounts of money that affect the bottom line. Overseas not only corporations but governments are wasting hundreds of millions of dollars because of a lack of visibility into their procurement activities.
A recent newspaper investigation revealed that the U.S. Department of Defense is guilty of wasting upward of $125 billion each year due to its lack of visibility into its procurement activities. (source: the Washington Post)
If this is true of the US Department of Defense, what is happening in Australia and New Zealand? Corporations can’t reduce their procurement spend when they are sourcing in the dark. Without visibility into your corporate spend, there’s no way of measuring how much money you’re paying and to which vendors if you don’t have visibility. If you don’t have that information, you can’t tell whether you’re getting the best deals or if you could save considerably by switching to a new supplier. You also wouldn’t be able to easily determine if you’re taking advantage of discounts or warranties that are available to you.
Reducing your expenses and optimizing your costs start with getting complete visibility into your procurement process. At Rowe Advisory, we have industry experienced consultants who specialise in reviewing and managing procurement. We can review your procurement, advise your business, gain visibility into your procurement and optimizing associated processes.
Additionally, organisations that Rowe Advisory is working with or have provided support to, now have complete spend visibility and are able to significantly reduce their costs, curtail maverick spending and improve their bottom line profits.
“We Guarantee our Work”
Procurement visibility enables you to quickly determine your financial position, inventory, contracts and budget projections. This in turn provides can improved cash flow and profitability to your organisation. If you would like to discuss how Rowe Advisory can assist your business with procurement, please contact us on (07) 3210 1104 or by email:
Chief Executive Officer, Jody Rowe, at jody@roweadvisory.com.au
Managing Consultant (Queensland), Bryan Schriiffer, at bryan@roweadvisory.com.au
Managing Consultant (South Australia), Richard Peasgood, at richard.p@roweadvisory.com.au
Managing Consultant (Victoria), Lucy Coward, at lucy@roweadvisory.com.au
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