Trade based on agreements increases profitability
If you want to run a profitable business, it’s important always to purchase goods at the lowest possible price, and from the supplier that assures the best quality, logistics and range.
You achieve this by negotiating favourable contracts and agreements with your suppliers. The higher the volume of your purchases made under contract, the stronger your bargaining position with the supplier.
What is it that determines whether an agreement is favourable for you as a buyer?
The quality of an agreement for the buyer depends on a range of factors. Research by KPMG has revealed eight parameters that determine the degree of success:
- Complaints and returns – how good is the process for complaints and returns?
- Quality – is the delivered product of the best possible quality?
- Price – is the price competitive for the level of quality?
- Logistics – can the supplier deliver, and what costs are associated with that?
- Lead time – how quickly can it be delivered?
- Social responsibility – social and environmental responsibility. Ethical guidelines.
- Range – is the range good and varied enough?
- Availability – does the supplier have enough of the products in stock at any given time?
These are eight of the points we present to potential customers when promoting the benefits of Millum Procurement. With Millum Procurement, you can rest assured that these eight requirements have been met. We’re delighted to see KPMG highlighting these points, and we know our solution delivers on them all. CEO MillumBjørn Anskau
Contracts pay off
The main objective of any procurement contract is to ensure contractual terms and prices, and that these are observed. Using Millum Procurement, you can ensure exactly that. Buyers have access to a database of approved suppliers and agreed prices, ensuring them the right product at the right price.
Our point of departure is that the main aim of every ordering process is to ensure that the contractual prices and terms are adhered to – every single time.
What usually happens
For many purchasers, it is often simpler or even ‘too simple’ to buy out of contract, whether by phone, e-mail or some other means. Complicated systems, weak master data, too wide a range and so on can all make it harder to make a purchase in the right way. The result is that the contract is ignored.
When personnel deviate from contracts and do their own purchasing, it takes a lot of money straight off the bottom line. In this kind of situation, both the buyer and the supplier lose. The buyer often gets the wrong product and most certainly the wrong price, while the supplier misses out on a sale. The only way of sealing all the leaks and eliminating the sources of buying out of contract, is to have a procurement system that’s easy to use and ensures the best possible business for everyone involved.
