Among the greatest cost saving Factors that a huge company should give importance to be the execution of a properly planned procurement application. Strategic procurement can help realize massive savings for your company because administrative overhead costs would be significantly reduced using an organized procurement system. With a managed procurement procedure, lesser man-hours will be necessary as each product would be purchased only a couple of times a year rather than replicating the procurement to payment cycle every time a commodity is necessary. Without a procurement program, maverick spending in different departments would not be controlled. Maverick spending can result to overstocking of materials and supplies, which if not properly stored can consequently result to wastage.
Having a procurement program also builds good relationship with providers because commodities would be bought in bulk. Purchasing in bulk makes it easier for providers to give larger discounts because bulk purchases may be considered wholesale, and wholesale cost is often less than the retail cost. A strategic procurement program Works best if direction would create a centralized procurement system. Through this system, only approved purchase orders could be processed thereby eliminating maverick spending and curtailing corrupt practices which may exist in a corporation. These corrupt practices could involve overpricing of products bought or secretly negotiating with providers for a discount that would not be supplied to the organization but goes directly to the pockets of the buyer. Using a procurement program, each procedure is recorded from the canvassing to the payment of the merchandise bought, thus management can audit each step of the procurement procedure.
With a properly managed Procurement program set up, operational efficiency could be enhanced which is essential for a business’s survival. Once a company has established its strength through its operational efficiency, it must attempt to create competitive effectiveness to have the ability to split its place firmly in the market. A procurement process program focused on a corporation’s strength as a competitor in the marketplace could greatly boost its position in the market. It should concentrate not only on the most efficacies and the savings that could result from its implementation but also on whether it is fitting or applicable to the needs of the company. This type of procurement program works and provides results if the firm ought to have the ability to carry it out regularly in order for it to yield the corporate benefit that are anticipated to result from its implementation.