If you’re an SME owner, it’s vital to ensure that your business runs smoothly. There are many steps involved in running an enterprise. As such, there are many chances for things to go wrong. Some of these problems are minor, but others can be downright disastrous.
One business aspect that many newbie entrepreneurs find challenging is procurement. It involves acquiring raw materials, goods, and services for a business. It requires managing supplier relationships, negotiating with them, and ensuring that all necessary items are from the right providers. If you’re one of those with procurement challenges, read on to know about the top procurement best practices small businesses should be employing to save money, time, and resources.
1. Utilize Technology
It’s imperative to have all the technology you need to run your business. You may think that you can do without technology because you’re a startup, but you’ll be happy to invest in tech because things would be running much faster and smoother in your business.
For example, using small business procurement software will make purchasing goods and services a breeze. A reliable software will help make the whole procurement process easy by allowing you to manage your vendors and supplies in one place, digitize all procurement-related processes, enable better integration, and finish tasks more efficiently.
2. Streamline Procurement Process
The use of technology is a crucial component of streamlining your supply chain to increase sales and help your business grow. Don’t think that since you’re a small business, you can get by with just your current process–even if it may be confusing, time-consuming, and utterly unreliable. To grow your business, you must get rid of clunky and inefficient processes at the get-go. Some of the areas you can improve are choosing vendors, inventory management, delivery times, and procurement costs.
3. Foster Solid Supplier Relationship
Fostering solid and sometimes even long-term relationships with suppliers, especially key vendors, can benefit SMEs. Some ways to improve your supplier relationship include making consistent payments and constantly communicating with vendors. With solid supplier relationships, you may be able to enjoy increased bargaining power in negotiations, get priority in delivery schedules, benefit from better terms, and possibly be able to lower the prices of your goods.
4. Regularly Review Internal Processes
The main objective for regular analysis of your company’s internal process is to help improve your business’s operational efficiency. You need to identify areas within your procurement practices that you could improve. Here are the critical techniques that you may want to incorporate into your procurement review:
This is crucial in eliminating unnecessary or excessive purchases. You can do this by reviewing the sales history of your business and determining which products in your portfolio are popular and which are not selling. It’s also vital to pay attention to trends to immediately decide what raw materials to order.
Preferably done alongside demand forecasting, tracking your inventory will let you know which items you need to order so that you avoid a situation where you run out of stocks. You can use apps to automate inventory management and get regular low-on-stock reminders.
Performed regularly, quality inspection is crucial even for goods received from long-time suppliers. Spot checking would help prevent you from using damaged or defective goods that could affect the quality of your products.
5. Broaden Your Network
If there’s one thing that many businesses learned because of the pandemic, it’s the need for a broader network. Doing so will ensure that when your present supplier can’t comply with your orders, you have other backup vendors to provide you with what you need.
Broadening your network will help you find new supplier partners. It’s also a way for you to find new expansion opportunities. For example, you might consider having a B2B sales department as part of your expansion. In that case, you may offer your products to your suppliers and perhaps enter into a sales agreement or ex-deals with them.
6. Consider Outsourcing
Small business owners need to get things done quickly. Thus, if there’s a lot of expertise required for a procurement initiative, it makes sense to outsource the process to a third party that has the right skills and experience. Suppose you are struggling with your procurement practices. In that case, you can look for companies that can consult or provide part-time procurement services. This move will enable you to concentrate on more important things like boosting your revenues and expanding your market share.
The Bottom Line
Small businesses that want to survive in today’s competitive environment need to be aware of all aspects of their operations. One often overlooked area is procurement. By making sure you enforce the best practices in your procurement process, you’ll see positive changes in your bottom-line numbers.