Guided Buying: A Solution to Cut Costs, Mitigate Risks and Enhance ESG Standards
Keeping a close eye on competition, enhancing your client offering, all the while managing to invest in innovation, has never been more important. With customers’ purse strings a good bit tighter, and rising inflation impacting the costs of business operations, running a tight ship and keeping up best practice is vital for companies to maintain – or even win – business in this climate. Because, when times are tough, it doesn’t always matter how fantastic your product is. Sometimes even the best offerings can see interest decline in times of challenging economic outlooks.
Now is a time of hard graft to protect and build profits. And that graft is even harder when businesses are feeling the pinch, too. For many, this context means that they are less willing to take risk. Attention is instead turning to ways to cut or streamline costs to enable greater cashflow and money in the bank to invest in business development.
But these money-saving exercises can present challenges. Most companies want to avoid drastic measures – quite literally at all costs. So, financial hygiene and housekeeping measures are always the first port of call. Where is there unnecessary spend? What are we overpaying for? What spend are we duplicating?
A common suffering among businesses, that contributes to all of the above, is a manual or disjointed approach to purchasing. Issues arise when purchase orders aren’t raised electronically, which prevents visibility of spend. There’s also a lost opportunity for businesses to make real savings when negotiated contracts aren’t purchased against. The incremental gains of everyone across the business purchasing from suppliers that procurement has negotiated best value contracts with results in substantial savings, more resilient supply chain relationships, visibility of spend for finance and a highly effective procurement function.
When individual departments and employees willingly ignore procurement’s contracted suppliers, preventing this maverick spend isn’t straightforward. The internal comms and guidelines may be fantastic, and there might be no confusion whatsoever as to which suppliers employees should be buying from, and yet, sometimes individual behaviours are just simply not possible to control.
But maverick spend becomes increasingly difficult to ignore when marginal increases on the books are all that’s needed to prevent more drastic cost-cutting measures from being implemented. It stops becoming a frustration or inconvenience and starts to become damaging behaviour. So, what can be done?
Thankfully technology presents a solution to create clear lines of communication that optimise the efforts of procurement and finance. That technology comes in the form of guided buying. Guided buying directs users to the preferred, authorised suppliers, ensuring that contracts and policies are in place and abided by with each purchase. Much like an online store that the average consumer is familiar with, guided buying presents a ‘shop’ of the supplier network that the procurement team has built.
Complete with user-friendly navigation and search capabilities, every purchase through this system meets business needs and ensures compliance risk mitigation – all while keeping it competitive. The supplier vetting, price negotiations, and managing contract pricing agreements take place way ahead of the user placing an order, so all departments can rest assured that pennies are being saved, potential fraud is mitigated and an efficient, effective spend management process is being delivered.
Guided buying also aligns with organisational ESG standards to ensure that purchases are made from good companies. This is crucial today with the heightened focus on sustainable and equitable business, which sees buying intrinsically linked with organisational risk, compliance and financial resilience.
But what makes this cost-cutting and bolstered reputational strength come to life is that the system has been built with the buyer in mind. With intuitive technology enabling a familiar consumer type purchasing experience, employees no longer need to invest as much time into the purchasing process at the detriment of their primary job function. So, with this ease-of-use, end-user adoption is high. This allows procurement and finance teams regain visibility of real-time spend.
Getting individual staff members to change their working habits to ensure they’re contributing to the organisational objectives of getting spend under management can be challenging. Especially when buying is an ad-hoc occurrence, habits are difficult to form. But as businesses face the pressures of juggling heightened ESG responsibilities while trying to protect and boost the bottom line, good software to support these efforts can help everyone get on with ‘the day job’ and make all the difference.
Proactis is a leading Source-to-Pay software solution provider for mid-market organisations across a range of service-led industries.
Its end-to-end modular platform enables customers to control spend and manage supply chain risk; improve compliance and governance of their purchasing activities; reduce the cost of goods and services; and deliver efficiencies, all through process digitisation and automation.www.proactis.com