How to Reduce Costs by Maximizing the Benefits of a Procurement System
Implementing a procurement system is about focusing on increased profits by gaining greater control over your own business, including reducing costs. After more than 20 years in the industry, Millum knows that this is not achieved overnight. It is about involving the entire company, from the boardroom to part-time employees, in a mindset of effectively cutting costs where possible.
The impact of implementing a procurement system depends on current challenges - and one should decide where to invest time and energy, as well as what strategic changes need to be made.
Implementing a procurement system like Millum Procurement, where all information about all purchases made from contract suppliers is gathered, will provide good overview, control, and cost reduction. Companies that truly integrate the system into their daily work will reap the greatest benefits. CEO at MillumBjørn Anskau
How to implement and use a procurement system varies from company to company. There is no one-size-fits-all solution or simple plan to follow. However, by following five steps, the company can get the best possible start and direction, resulting in positive outcomes.
1. Overview of the Company's Purchases
Transparency and overview of what your company buys from whom and how much is the first step. By analyzing and looking at where the expenses lie, one can identify and categorize the expenses and explore solutions in collaboration with suppliers. With an electronic procurement system, you can determine which suppliers your purchasers should buy from, thereby reducing uncertainty and gaining better control over costs, including product costs.
The most important thing is that you have suppliers who, along with you, will develop the customer relationship. By consolidating purchases with a few regular suppliers, you strengthen your position in negotiations and gain better insight into ongoing expenses.Bjørn Anskau
2. Take Control of Costs
Once you have gained an overview, it is time to take back control. If you discover that you are purchasing a lot within certain categories and from specific suppliers, you should take the opportunity to renegotiate agreements to gain more control over costs.
With an electronic procurement system, you can determine which suppliers your purchasers should buy from, thereby reducing uncertainty and gaining better control over costs, including product costs.
Cleaning up agreements, gaining greater cost control, and limiting purchasing rights may seem like an administrative nightmare. But by implementing a procurement system, you can address all of these issues. Then you can assign different rights, track purchases, see contract loyalty, and find the best and right suppliers.Bjørn Anskau
3. See the Effect of Changes
Once you have gained an overview and control, you can finally begin to reap profits. Now you can see the effect of the implementation. It's about optimizing resource utilization.
Systematizing purchases should free up resources and allow employees to spend time on what they do best - namely serving guests. If you have a standard menu, for example, you can set up automatic orders on shopping lists with everything you need.Bjørn Anskau
4. Analyze Expenses to Save More
For a system to provide the greatest value, it is important to constantly focus on ways to save money. If you have ongoing control and overview of what the company is purchasing and from whom, it is easier to shift focus to cutting costs without affecting the delivered product. When chefs calculate and purchase what they need to prepare through a system like Millum, they have full control over their costs and can thus set an appropriate selling price based on the cost level in the calculations.
But remember that the agreements with your suppliers are the most important thing you have. If they are not good enough, it doesn't matter if you have the best chefs or a well-functioning procurement system. You must constantly work on your agreements to get the best terms.Bjørn Anskau
5. Create Long-Term Value
To attract new customers and retain existing ones, it is primarily about building trust and relationships for the long haul. Lowest price doesn't always win - delivery guarantee, quality, overview, and meeting expectations are equally important. Especially after the advent of the internet and e-commerce, the demands from both buyers and suppliers have changed. By following these steps, you will position yourself well to be among the best in procurement.
Good agreements are built over time and are based on trust and relationships. If you greet the supplier with open arms, you will experience the same in return. If both parties see value in the collaboration and understand each other, they can build good relationships together.Bjørn Anskau
Source: http://www.claritum.com/5-steps-to-procurement-best-practice/
