For procurement departments, where budgets can be constrained even when the economy is not in turmoil, lessons learned from those companies that survived the recalcitrant economy are invaluable. Uncover the top four tactics that best-in-class performers employ to elevate procurement proficiencies, along with the metrics they use to measure their success.
There are few positives to an economic recession. But one silver lining lies in the lessons learned from those companies that survive despite such challenging business conditions. These lessons are especially helpful to procurement departments, whose budgets are often constrained even when the economy is not in turmoil.
So, how have the survivors of the recalcitrant economy pulled through? How have best-in-class companies found new and strategic ways to elevate their procurement proficiencies? To find out, SAP spoke with seasoned procurement executives from companies of various sizes and across several vertical markets. Here we’ll share the top four tactics employed by best-in-class performers, along with the metrics they use to measure their success.
Tactic #1: Prioritize the Spend Categories You Want to Manage
Most companies find that opportunities for cost savings exist across the entire organization. However, some opportunities present a greater possibility for savings than others. Start with categories that are simple to standardize and will deliver a high return. The indirect goods category is a prime target because these commodities provide the perfect opportunity to leverage catalog content management tools, punch-out catalog sites with preferred suppliers, and common data interchange formats. Next, prioritize a second tier of categories by carefully analyzing the total spend by category, the percentage of off-contract spending, the complexity of each category, and the potential impact that cost savings in that category could bring to the business.