7 procurement best practices to improve your SaaS buying process
Procurement best practices lower costs while saving time. Learn to tailor best practices for your company and supercharge procurement with the right technology.
Best practices are sometimes viewed in the context of idealism. While “best practice” is a popular (if vague) objective for most businesses, being proactive in establishing and promoting best practices has a measurable impact on success.
Most attempts to adhere to best practices fail not due to lack of will — but rather lack of specificity.
To improve the odds of success, understand the reasons for implementing actionable best practices in your organization, the unique challenges of applying a standard “best practice,” and the commitment necessary to achieve change
This article shares best practices to prioritize procurement programs and discusses how technology improves the real-world experience and outcomes for businesses looking to improve their procurement function.
Why and how you should implement procurement best practices
Efficient process is the cornerstone of success for growth-minded companies. By developing and implementing organizational best practices, companies can illuminate many of the barriers standing in the way of revenue creation.
- Outline your objectives: It’s difficult to fix everything at once. Outlining desired first-phase objectives for the business can help highlight best practices to prioritize. A better understanding of the functions and actions that lead to the “highest good” of the business allows stakeholders to focus and refine those efforts.
- Identify your champions: Implementing these best practices with a top-down approach is important. When high-level “champion” stakeholders encourage (and demonstrate) best-in-class behaviors, these improvements translate to every level.
- Establish continuous improvement: For procurement best practices to become part of company culture, it requires a combination of implementation and education. Documenting expectations is not enough; leaders from every department must drive adoption through participation. After implementation, establishing a cycle of feedback and improvement furthers procurement practices.
With these three simple steps, the organization can begin a journey from discussing best practices to fully participating in process improvement.
How improving your procurement function saves money
Efficiency in process breeds efficiency in costs. By building sound procurement practices, organizations can close many of the gaps that lead to cash leaks and loss of leverage.
Procurement improvements have several top-tier benefits:
- Faster processing times
- Fewer negotiation “false starts”
- Better contract terms
- More accurate needs evaluation
- Lower third-party risk
- Better cost avoidance
- Better cost per unit and total cost
- Stronger supplier relationships
All of the above factors can reduce costs and increase ROI in your procurement.
7 best practices for more efficient procurement
Establish strategic sourcing
Using strategic sourcing techniques such as preferred vendor lists, Competitive bid processes, and sustainable procurement practices has the dual benefit of reducing bottom line cost while improving your supply chain resiliency. Strategic sourcing is also vital to risk management and reducing potential costs from third-party liability in the procurement process.
Build budget guidelines
All spending practices should be based on reasonable budgets and forecasting that support growth while reducing the total cost of ownership. Department of budget guidelines and spending policies can fine-tune decision-making for your stakeholders and ensure organizational objectives stay at the forefront when teams are considering buying options and creating purchase orders.
Create approval workflows
Having a system for evaluating and approving every procurement request creates accountability for company spending. A modern procurement process that standardizes evaluation and approval will result in overall cost savings while speeding the procurement cycle. An approval workflow can be as simple as a list of prerequisites (as described below) and a progression of departmental approvers who can check a deal's legal, financial, and security aspects before major negotiations get underway.
Establish departmental prerequisites
As described above, each department should have a list of prerequisites that outline expectations each vendor contract should be able to meet. While Many of these prerequisites will come from the legal team, finance and security heads should also outline contract expectations and requirements For contract terms, renewal processes, service-level agreements, and security protocols for uptime, network, and data security protection.
Analyze procurement metrics
The best indicator of future Potential can be found in past performance. For this reason, establishing and monitoring data analytics for your procurement activities should be a high priority. By establishing KPIs and regularly adjusting procurement strategy to meet them, procurement professionals can drive value creation within the organization.
Improve supply chain management
No business operates in a vacuum. Modern procurement depends on an intricate ecosystem of upstream and downstream suppliers and distributors. Within your software buying process, SaaS vendor management may translate to smooth and cost-effective third-party integration and effective service-level administration that ensures continuity in receiving service from suppliers and delivering services to end users.
Consider procurement technology
Modern procurement teams are faced with an increasing pace of procurement. Technology options such as eprocurement, contract management tools, and supplier relationship management software can lighten the load. Embracing digital transformation can increase spend optimization And help procurement leaders realize more cost reduction opportunities.
How automated procurement processes improve SaaS buying
The proliferation of SaaS has made it more challenging to visualize and control the tech stack. Automation provides a way to organize and scale procurement as organizations grow. With procurement software, companies can:
Speed close times: An automated procurement system aligned with an efficient procurement management process enables teams to move faster and close deals more easily. Automation eliminates the need for manual processes And allows teams Oakus on higher priority initiatives.
Reduce waste spending: Automation and good process illuminate the blindspots That lead to redundant tooling and lack of negotiating leverage. The visibility and budgetary controls available through automation can easily curb maverick spending and reduce overall tail spend.
Empower decision-makers: Access to real-time and historical data provides a solid foundation for data-driven decisions that create better outcomes. Stakeholders can streamline their practice and planning by centralizing access to procurement contracts, pricing data, and supplier performance metrics.
How Vendr helps streamline procurement to save time and money
Using technology to streamline procurement will enhance each of the above best practices. With a tool like Vendr, companies can outline and encourage procurement best practices at every level of the organization.
By taking a top-down approach paired with a sophisticated procurement management solution, businesses can move beyond vague concepts of best practices and take concrete actions that reduce busywork and increase profitability.
Get an inside look into the platform where you can discover and buy new tools, see how much you're saving on software, and stay up to date on your IT stack with our free guide to the Vendr SaaS buying platform.
