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Procurement: Data is key to lowering costs

Procurement departments are key when it comes to ones bottom line. Costs are made, but more important; cost are saved. By managing the supplier chain and finding ways to reduce costs, procurement departments play a key role for a company's bottom-line. A reliable procurement system is designed for speed, productivity, and precision. However despite all protections, problems reaching from human error to organizational limitations can still have a undesirable effect on a company’s procurement and purchasing capacity.



Lowering costs

There are many challenges in procurement, for there are many factors that influence procurement. The primary directive for the procurement team is to lower costs, this is often a difficult challenge for many factors influence the costs made. Often there is time pressure, which causes hasty payment and thus flaws. To prevent such ominous payments, one should find the root cause of the issue at hand. Taking a look into operations would be the next step to take. How many unintentional orders are placed on a monthly or quarterly basis? Should you review your approval procedure to prevent those accidents from occurring in the future? Are you missing rebates or even paying late payment fees? To answer these questions one has to get to the root of the problem. Going back to review your operational flow and min/max levels and adjusting them can help to continue to reduce cost and achieve greater cost savings.


Getting it right: Accurate Data

The procurement process has become more automated. There are many programs on the market today that help procurement departments streamline their processes. These platforms all rely on the data that has been entered. So the data entry process is of high importance, however this doesn’t always go as smooth as it should, or better said; not as accurate as it should. And one is only as good as its data, and so inaccurate data is one of the procurement challenges that haunt many buyers. Challenges with data accuracy are commonplace in many procurement departments. Considering updating your software to help bridge these gaps, whether they be for spend analysis, benchmarking, or market research would be a good idea. Finding a partner to do this would be a wise decisions, for data management can be quite challenging.



Data and costs: A step ahead

So to achieve costs reduction one should use their data from their ERP system. This will show you where your ominous payments originate from and where rebates are missed, and based on the information at hand one can make decisions driven by data insights. So, find yourself a partner who can help you unlock the value of your data and start making decisions based on factual data to get ahead.

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