SCDigest Editorial Staff

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New procurement skill sets are often required to really benefit from many of these strategies. For example, new decision frameworks and tools are often required when moving to strategic sourcing paradigms where “small number” supplier decisions must be made. What do you say? Send us your comments here

Purchasing managers have an increasing array of tools and “best practices” that can be leverage to reduce costs and increase procurement effectiveness.

Below is a list of 10 comparatively new approaches to procurement and sourcing companies can consider in their tool kits. The reality is that a growing number of companies have embraced many of these techniques, and that they are becoming increasingly “mainstream.”

1. e-Auctions: Any one of a number of “reverse auction” electronic bidding approaches conducted over the web.

2. E-Procurement Systems: Web-based transactional purchasing systems designed to automate the procurement process and move to a paperless operation, reducing the cost per purchase order.

3. Spend Visibility/Analysis: Analytic tools designed to control renegade spending and highlight opportunities to better consolidate or leverage purchasing power.

4. Global Sourcing: Identification, qualification, and consideration of suppliers across the globe, especially in low-cost countries.

5. GPO (Group Purchasing Organization): Entity or association that pools volume from multiple companies and negotiates better rates with suppliers than each company could do on its own.

6. Longer-Term Contracts: Master, or umbrella, contracts or other agreements structured to extend a special commitment to a supplier. Usually 3-10 years in duration.

7. Purchasing Cards: Credit or debit cards issued to end-users for direct purchases; consolidated statements. Used for small-dollar purchases. Intended to reduce the number of purchase orders.

8. Purchasing Council: Central/corporate sourcing and/or purchasing done on behalf of operating divisions. Intended to consolidate and control spend.

9. Rationalization: Reduction of the number of suppliers to achieve optimal total (internal + external) cost. This may involve strategic alliances that leverage multiple aspects of each organization’s business (partnering).

10. Value Engineering: Analysis of the materials or design/features of a purchased product or service, with the intent of reducing the complexity or standardizing on certain purchased materials or services.

New procurement skill sets are often required to really benefit from many of these strategies. For example, new decision frameworks and tools are often required when moving to strategic sourcing paradigms where “small number” supplier decisions must be made. Use of e-Auctions puts more of a premium on the upfront qualification of suppliers and structuring of the electronic process itself, rather than negotiation skills.

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