But despite that, cost reduction will always be at the very top of the agenda. There are numerous areas you can focus on in order to cut costs, and time management is one of them.
As a procurement manager, your time is a commodity. A valuable one at that. As such, managing it effectively is crucial if you hope to keep the operational costs as low as possible. Strangely enough, this can mean that not taking advantage of certain cost-reduction opportunities is sometimes the correct choice. This sounds like the complete opposite of what a procurement professional should be doing, but there is a reason for it.
If you’re a procurement manager in a larger company, you’ll deal with many suppliers. Perhaps even dozens of them. As you inspect your supply chain, you might spot an opportunity for savings. For example, you could be confident that you’d be able to negotiate a better price due to new market conditions. However, there is a catch – the supplier in question is low-end and the order size is small.
So, you could save some money there. But, you need to ask yourself if doing that would be the most efficient use of your time. As mentioned, it’s a small supplier and you have significantly bigger orders to think about.
In a case like this, pursuing such savings may simply not be worth it. A minuscule price variation is not very likely to lead to significant savings. In the end, the time wasted could cost your company more than the savings.
This means you should tackle the big issues first. For instance, focusing on process management can lead to very significant savings down the line. Another example is marketing. Procurement managers need to ensure the marketing team doesn’t overspend as the potential for cost reduction here is great.
Today, the job of procurement managers is more complex than it’s ever been. But that also means they can bring more benefits. To see how it all comes together, have a chat to our team at Promotional Centre today.