Typically, in manufacturing businesses, the cost of purchases is 60% of turnover. In service industries too,
purchases are often the largest element of costs. Any savings deliver straight through to the bottom line.
So an 8% reduction in purchase costs (at 60% of turnover) can increase return on sales by 5 percentage points.
Reduction in purchase costs can be an easy way to increase profitability.
But many purchasing cost reduction initiatives fail to deliver bottom line profit improvement.
This is especially so in businesses that fail to appreciate the total cost of acquisition,
fail to recognise the indirect cost associated with poorly specified requirements, fail to engage stakeholders,
or pay insufficient attention to the selection and management of suppliers.
We provide a range of services to support and optimise procurement and purchasing operations, including:
» Identification and specification of requirements
Working with multifunction teams to establish the true nature of requirements.
» Supply market analysis and development
Interacting with the supply market to create the conditions for best meeting the requirements.
» Risk management
Identifying risks and vulnerabilities; avoidance and contingency planning.
» Developing contract strategies
Defining the contractual arrangements to derive maximum contribution from suppliers.
» Supplier evaluation and selection
Finding supplier who can best meet the needs of the contract strategy.
» Vendor improvement programmes
Improving potential suppliers' capability to maximise contribution to the purchaser.
» Contract management
Managing the contract cycle, from request for quotation to execution;
contract terms; protection and remedies for the purchaser;
motivating the supplier.
Commercial negotiation, either independently or as part of a full contract management service.
» Supplier performance management
Identification of key performance indicators; measuring and controlling in-supply situations.
» Purchasing organisation
Methodology for determining optimum organisation to maximise purchasing performance.
» Category management
Organising resources and processes to focus on the supply markets and maximise leverage.
» Purchasing skills development
Assessment of skills and activity; determining training/recruitment needs.
We can manage or advise you on the outsourcing of in-house operations.
We can help you to optimise your purchasing, to drive down the total cost of acquisition and maximise the overall contribution from your suppliers.
professional purchasing in practice