Does your company have a strategic procurement? -Section II

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The main ways of strategic procurement:


1. Centralized purchasing 

It is a basic strategic procurement method to increase the bargaining power and reduce the unit procurement cost through the concentration of procurement volume. Centralized procurement planning and management of productive raw materials or non-productive items reduces the variability of purchased items to a certain extent, improves the standardization of procurement services, and reduces the workload of later management. But have to say that centralized procurement has also increased the difficulty of communication and coordination between other departments.


2. Expanding the supplier base 

By expanding the scope of supplier selection, introducing more competition and reducing procurement costs. This is why large multinational companies have set foot in China one after another, and using China as a raw material procurement center and manufacturing center. However, for some core production and service organizations of raw materials and product companies, they often establish long-term relationships with a small number of strategic partners, while protecting the proprietary nature of core technologies, it is also convenient for joint development of new products / services Improvement. 


3. Optimize procurement processes and methods 

After optimizing the two purchasing factors that objectively affect the cost of procurement, the space for further cost reduction shifts to soft management optimization. For example: Introduce competition through bidding; make full use of the game mechanism between suppliers in open tendering; and choose the supplier that best meets its own costs and benefits; and reduce procurement processing costs through electronic procurement; the economic batch calculation reasonably arranges the purchase frequency and reduces the purchase cost and storage direct and indirect costs in batches; and makes selective purchases of services and raw materials provided by suppliers.


Believe that any service provided by a supplier is price-included, either directly or indirectly. Therefore, companies can subdivide them, try to be transparent about all price factors, and then select the required raw materials and supporting services to reduce the overall procurement cost. 


4.Standardization of raw materials / products / services 

At the product and service design stage, full consideration will be given to the operating costs of future procurement, manufacturing, storage and transportation links, improving the standardization of raw materials, processes and services, and reducing subsequent costs caused by differences. This is a kind of strategic procurement with higher technical content, which fully reflects the optimization of the overall supply chain, and often has higher requirements for technical feasibility.        

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