We All Follow A Procurement Cycle
We all make personal purchases of goods and services throughout our lives. First, we identify exactly what we wish to purchase and we then, often subconsciously, consider what’s going to deliver best value for us, this might be based on cost, or quality or something totally different. Once we’ve done this, we’ll usually compare different suppliers to see which one gives us best value and if possible, negotiate on the price before going ahead and making the purchase. Sometimes these purchases require a contract to be set up with the supplier, for example a mobile phone contract or a car finance agreement. At the end of the contract, we repeat the whole process all over again. Despite many people being unaware of this they’re following a simple procurement cycle.
A simplified example:
An individual wants to purchase a new car. Having done their research, they come up with list of the make and model of the car and the exact specification they want. Their choice of car will be driven by their values and budget.
Next, they’ll research the garages who are able to supply the new car they’re after and having test driven the car they’ll make their choice from which one they purchase the car. Cost is going to be important, but there may be other values considered as well.
Having selected the garage, negotiated the price of the car a three-year lease finance contract is signed. Sometimes there may be problems that arise that need to be resolved and it’s the supplier’s response to this that we have to manage, which costs us our valuable time and sometimes money.
Towards the end of the contract, assuming the individual wishes to purchase another new car the process is repeated all over again.
We follow the same steps in business. However, the process is made more complex and time consuming as usually the amounts of money involved are far larger, there are other stakeholders involved and the values criteria used to evaluate what offers best value are generally not just determined by one individual.
The contracts themselves are usually more complex and there aren’t consumer laws to protect the business. The performance of the supplies under contract impacts the overall success of the company and the potential risks are far more significant than for a consumer and can result in time and money being lost and potentially damage being done to the business. Therefore, its essential for the companies to have consistent visibility and control over the whole procurement process from sourcing to managing contracts and suppliers.
Most larger businesses have established guidelines for every part of the procurement process that are followed to deliver consistency and save both time and money. Many of these same companies have over recent years invested resources into a digital procurement solution to further increase these savings and to ultimately protect the bottom line of the company and to reduce unnecessary risks.
For the many smaller companies with fewer resources there is one digital procurement solution, oboloo, that has been specifically designed for SMEs. oboloo is an intuitive and simple self-service platform that gives full visibility and control over all sourcing, contract, supplier and savings management. oboloo enables companies to be supplier smart. To learn more please visit www.oboloo.com