It doesn’t matter what size of company you have, you will have suppliers, overheads and bills coming in that need paying. You’re also going to have contractual obligations, whether or not you have an internal legal team and/or procurement team at your disposal.
No matter the size of your operation, you must control your overheads otherwise they’ll rip your organisation apart.
Late payments, supplier difficulties, delayed deliveries, expired contracts, rates increases etc. The list goes on.
What tends to happen in business though is the early stage start-ups focus on strategic growth without concern for the consequences.
Growth will happen when you put the efforts in and focus on strategic growth tactics, but when you do find your organisation growing, so too will your obligations, probably your staff and most certainly your overheads.
The more obligations your business has, the more reliant you will become on your suppliers. Without careful management, you risk your business being placed in a vulnerable position should your supplier find themselves with a competitive advantage because of your inability to control your procurement processes.
You absolutely must have processes in place, policies to control them and strategic systems to manage them both. Without those in place, your overheads will increase – substantially if you’re not careful.
Why be bothered with all the hassle?
If you’re focusing on growth right now, get yourself ahead by preparing for when you reach that stage. Visualise your business a year from now, two years from now, five years from now and you’ll likely see yourself going places.
Perhaps you’ll have a team of 50 employees or you could expand your operations by opening on more sites, hiring more people to aid in your expansion, in which case, prepare for that time.
What procurement specialists can do to help you prepare
If you don’t have the capital to invest in your own procurement staff to get things under control, outsource your outsourcing. The reason being that whilst the cost-savings will take longer to experience, you won’t be wasting cash flow in the short-term by spending on growth strategies to see the fruits of your labour wasted. You will retain more of your profits by having proficient supplier management processes in place, preventing things getting out of control.
All too often, what happens is companies experience expansion, then realise too late that they’re spending way more than they’re comfortable with and then have to bring in experts in procurement to clear up the mess made by inefficient sourcing and supplier management.
It prevents the battle of all battles…
When companies look to bring about cost efficiency, procurement experts are trusted to deliver on savings. To do that, it takes strategic sourcing, contract reviews, a huge advisory role and often a complete transformation of sourcing due to non-existent procurement policies.
As such, the savings commitment you will be looking for, will take longer to deliver because more tactical groundwork will need to be done before savings can be realised.
For any business focusing on growth strategies right now, get prepared for the increased obligations that accompany that by putting in place efficient procurement policies, and processes to manage the increase of suppliers and the relationships that come with them.
The more proactive you are with your procurement; the more savings you’ll lock-in before you start wasting it on inefficient sourcing methods.
Image courtesy of norcazacademy.co.za.
