Procurement is a very important part of any business. Without it, you won’t have the right products at the right time and price. But if you don’t know what you’re doing, then your procurement process can cost your company in more ways than one! Here are some common mistakes that companies make when it comes to procurement:
The Right Products, At the Right Time, At the Right Price
The first step to ensuring that your procurement process is efficient and cost-effective is understanding what you want. This can be a difficult task, especially if there are multiple contractors bidding on jobs or if the contract is complex in nature.
To begin with, think about what you need. Do you need something immediately? Will it be used by one person only or many people at once? Is there an end date for delivery and/or use of your product? Once these questions have been answered, then it’s time to consider how much money will be spent on this purchase (and whether or not it’s worth spending more).
Next up: when does this thing need to be delivered/used? If someone else is making this decision for themselves essentially “buying” a product before buying anything at all more often than not means less efficiency because every day wasted waiting means more time spent getting things done quickly instead of doing them right away!
Getting Stung by Pricing Errors
If you’re a business owner, you’ve probably been stung by pricing errors. This can happen when your supplier charges an incorrect price or when they overestimate the cost of goods and services.
If you’ve never dealt with this before, it can be difficult to know what to do next—but don’t worry! We’ve put together some tips that will help ensure your company doesn’t get caught up in any unnecessary costs.
First off: Understand the difference between a price error and a pricing error (and why it matters). In most cases, both involve an inaccurate quote from a supplier; however, there are some key differences between them:
- A pricing error is simply an incorrect amount quoted by the supplier—it’s not necessarily intentional on their part (i.e., they didn’t intend for there to be such an error). So, although this may seem like less of an issue than other types of errors listed above because it doesn’t affect how much money ends up being paid out overall (and therefore doesn’t impact profitability), it still needs attention, nonetheless.
Not Getting Your Invoice Strategy Right
You’re probably thinking, “How hard can it be?” In reality, it’s not as easy as you might think. Here are some tips for getting your invoice strategy right:
- Make sure that your supplier knows what they need to do with the invoice before you send it out. This can help prevent any confusion or errors during processing of the payment request.
- Create a template so that all invoices follow similar formatting and formatting standards across suppliers (so that no one has to worry about sending a different format each time).
Failing To Manage Your Spend Data and Processes
It’s important to understand how you’re spending your money and what drives that spend. This is especially true if you want to be successful with a leaner procurement process, because if your data collection and analysis isn’t thorough enough, it won’t be possible for you to make informed decisions about which contracts are worth pursuing.
Also read: 7 STEPS TO IMPLEMENTING AN E-PROCUREMENT STRATEGY PLAN THAT WORKS
It’s also important that everyone in the company understands how their spending impacts the bottom line, so that there are no surprises later on when budgets are tight or new demands come up unexpectedly. If one person doesn’t know what another employee is doing with his time (or herself), he could end up wasting resources unnecessarily—and even worse: misrepresenting those resources as being spent elsewhere when they’re not!
Not Having a System for Supplier Performance Management
The most important thing you can do to improve your supplier’s performance is to have a system in place for managing them. This will help you identify problems early, so that they can be fixed before they turn into big problems.
To define a good supplier:
- They should be reliable and professional. They should deliver what they promise at the time promised, or within 30 days of being asked for it (depending on their type).
- They shouldn’t make excuses or be late delivering materials or services more than once per year – even if it’s just by an hour! A good rule of thumb is that if something takes longer than 3 weeks from order date to delivery date then something has gone wrong somewhere along the line; either with the ordering process itself (which might mean there wasn’t enough staff available) or management did not properly plan ahead when designing the project etc…
Never Letting a Good Opportunity Slip Through Your Fingers
- Know your market.
- Know your suppliers.
- Know your customers.
- Know your competition and be prepared for them to do what you are doing better than you can do it yourself (this is a good thing!).
The Solutions Are Easy When You Have the Right Software in Place
It’s easy to make mistakes in procurement. The solutions are simple when you have the right software in place, though. It should do everything that your company needs it to do and more. So, here are some tips on how to avoid common procurement mistakes:
- You need a system that is user-friendly and flexible; it should be scalable so that it can accommodate growth as well as changes in processes or technology
- You also need a system that is secure and reliable; this means ensuring that all of your information will remain secure even if someone gets access to it (and if they steal something from one department then they shouldn’t be able to use it for other purposes)
Conclusion
We think these are all great examples of serious mistakes that can be easily avoided with the right software in place. These tools not only make our lives easier, but they also give us a competitive advantage over other companies who aren’t using them yet. That means there’s no excuse for not getting this stuff right—just get on it!