The true cost of procurement

The true cost of procurement

Consolidating a company’s supply base is one of the major factors in streamlining and reducing process costs. Being efficient when choosing suppliers for your Goods Not For Resale (GNFR) can greatly improve the bottom line.

Under a single source supply strategy, companies can work towards reducing the number of  not-for-resale commodity suppliers they need to trade with.

By consolidating purchases made to a single supply partner frees up time and provides full visibility and control over all purchases made. Some suppliers will go the extra step by building a bespoke procurement web portal, making the process even easier. At Acopia, we have just done that with Single Source and if your business has multiple outlets who all need to order stock, we can support that too with our new service MyAcopia.

Areas of GNFR focus includes packaging, retail consumables, shop fittings and display systems, janitorial supplies and cleaning products, canteen and refreshment supplies, office stationery, print and posters and work wear.

Cost savings through consolidation

A small reduction in a company’s supply base can make substantial savings in back office and hidden or ‘soft’ process costs. Few companies realise the true cost of procurement which is generally accepted to average more than £50 per transaction. Consolidating just one supplier who you order from, say twice a month, can easily deliver savings of over £1,000 per annum – an incredible saving from simply consolidating process.

Having a single place for your staff to visit for all online ordering can also improve the compliance of using preferred supplier contracts, which in turn reduces ‘maverick’ spend. This can be particularly effective for group companies, with multiple site locations.

Using a single source procurement method can also help in situations where very well meaning and conscientious staff place two individual orders with two separate suppliers to achieve a few pounds saving.  They think they’ve done a great job and have saved the company money, but unfortunately they ended up costing your business substantially more than they have saved, because they are unaware of the costs associated with processing and time spent with raising that second order.

For that reason, it is particularly important that any implementation plans are supported by and driven down from the top of the management chain – with clear instructions to users in terms of where they should buy and why!

If you would like to talk to Acopia about our full Single Source service – we would be delighted to assist. Call us on 0845 075 6111.

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