Autonomy is one of the approaches that can help mid-sized companies and large businesses to grow because it eliminates unnecessary delays. It is also worth noting that empowering your branch employees to make purchases directs your attention on those engagements that will promote the growth of your firm as a whole.
The challenge is that some business operators invest most of their resources in the management of revenue-generating expenditures, which can reduce the focus on controlling indirect costs. It is a fact that your enterprise cannot function without the support of indirect vendors, and for that reason, you need to consider how you can manage the costs that keep your company running.
Handling multiple indirect suppliers is a daunting task for government entities and huge corporations and here are some of the ideas that can help you manage a large number of this category of vendors.
Invest In New Technology
Cost management is an indispensable factor of consideration in procurement procedures for any manager who wants to achieve success. Discovering how you can save on the cost of procuring various products and services for your organization will increase profitability, and one of the ways you can accomplish this is by investing in new technology.
Today, established businesses are investing more in technological applications like VIT‘s catalog management software, eLink™ Gateway, that can bring multiple suppliers on one platform, which results in enhanced management of all vendors. Some of the benefits that large business owners will enjoy as a result of using new technology in the control of their engagements with indirect suppliers include:
- A better understanding of the trends in the market.
- Precision in category management.
- Increased transparency relating to specific location expenditures.
- Establishment of mutual relationships with different vendors.
Consider Hiring Procurement Specialists
Effective management of indirect suppliers involves many of dynamics, including the need to change vendors regularly as well as the periodic renewal of individual supplier contracts. The implication is that being overwhelmed by suppliers will keep you from focusing on the core objectives of your enterprise and various inconsistencies may set in as well.
Hiring more procurement specialists will reduce the pressure of dealing with various suppliers on you, and the professionalism of these experts will promote efficiency in procurement procedures throughout your enterprise. If hiring additional procurement experts for each of your spend categories is not part of your plan, acquiring a sophisticated procurement software solution to streamline vendor onboarding is also an option.
Strengthen Internal Relationships
The idea of streamlining procurement activities in large companies may not be welcome for various reasons, and if particular employees did not approve specific changes, they might resist some of the decisions that will affect the procurement procedures of your organization.
Building a rapport with operational managers across your business units by listening to their suggestions regarding indirect procurement operations rather than forcing your procurement culture down their throat is a wise idea.
Close engagement of individuals who procure indirect services for your large firm will yield a better understanding of future requirements as well as insight beyond the knowledge you have about indirect vendors, which will enhance the management of your vast number of indirect suppliers.
Prioritize Retention of The Right Indirect Suppliers
Constant communication with indirect suppliers fosters collaboration, which is a necessity for successful procurement engagements. Apart from promoting mutual relationships, liaising with indirect vendors as frequently as possible will also reveal those suppliers who are just out to sell you their products and services as well as those who appreciate the need to improve your business operations continuously.
Indirect suppliers who have the best interests of your company at heart will seek to become dependable business partners, and these are the kind of vendors you should retain in your portfolio for effective management of multiple indirect suppliers.
Track and Regulate Your Spending
You cannot manage a considerable number of indirect vendors if you do not regulate the amount of money every branch is planning to spend on the procurement of indirect services. The fact that some vast enterprises allow their subsidiaries to function autonomously does not mean that employees are at liberty to use any amount of money on vendors of indirect products and services. Implementing e-commerce systems that include management control features in real time during the shopping experience can help with this.
Insisting on continuous reporting of the books of accounts as a way of tracking and regulating the indirect expenses of each of your branches plays a significant role in the management of multiple indirect suppliers. You can opt for the quarterly, half year, or annual concept of reporting indirect expenses depending on the resources available for monitoring and regulating the same.
Adopt Strategic Planning
The procurement of products and services from different indirect vendors involves complex procedures and the contribution of various stakeholders. Large entities that engage indirect suppliers regularly should consider bringing all interested parties on board during the process of procuring indirect products or services.
For instance, procurement and logistics teams can work together in sourcing the services of indirect suppliers, which will increase the potential of identifying opportunities for cost reduction in addition to availing into better management of multiple indirect suppliers.
eLink™ Gateway: Procurement Management Software
eLink™ Gateway is the only software designed to give you control over purchase decisions throughout your organization. eLink™ is truly software as a service (SaaS) and comes as a customizable part of VIT’s business process automation services, helping to drive savings and increase efficiency in your business.
For personalized information or to schedule a demo, give us a call at 704-296-2987 or visit valueinnovationtech.com. To discover more about our industry-leading software and how it can help your business save money on indirect materials spend or how it can help you reach your customers with e-commerce, please visit our blog.