Procurement Tips

Don't Forget About The Low Value Spend.

What does this mean?

In some organisations low value, high volume procurement or purchasing happens on a hourly basis. Even more so in small businesses. I need so I get.

These types of purchases are usually for small value goods or services that are generally obtained operationally and on a sole price basis. To most businesses this doesn't seem to be a problem, but if left unchecked or as a company grows these spends will grow and control over your spend and supply chain is vastly reduced. Thus diluting your businesses profits, cash-flow and buying power in the market.

From an effective Supply Chain Analysis it is easy to understand where this is happening in your business and with which suppliers. Once identified this can be effectively controlled in a number of ways. For example implementing aligned purchasing approval levels or by establishing fixed price agreements to support the business with these daily needs effectively.

It is key to remember that 95% of the time these goods are required, sometimes urgently. So it is procurement's responsibility to ensure the business is adequately supported to deliver these requirements in the most cost effective way. Using the Supply Chain Analysis the procurement team can easily identify the spend categories required and support them effectively.

It is good practise to complete a Supply Chain Analysis every 2 years, as supply chains can change dramatically with the businesses objectives and performance.

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