Marquerite Schoeman

Have you ever thought about how you can make your company more cost-effective and subsequently more productive in an ethical manner?

Procurement is a massive part of any Company’s costs.  In fact, studies have shown that the procurement category represents about 30% to 70% of a company’s total spend[1].

In order to achieve this one must make sure that your procurement strategy understands your company’s corporate strategy and its objectives, and thereafter identify how it can effectively support this strategy. This is important for any company where the executives of the company wants to reduce costs. One way of doing this is by involving the procurement department which will then do a spend analysis / audit on the company’s costs / total spend in order to determine potential cost-cutting avenues to increase profit.

Another aspect to keep in mind is to identify what the most profitable products or services are in your company and then to focus your supply chain strategy on these popular products or services.

Is your company using too many different suppliers to provide services? An avenue to consider to reduce these strenuous suppliers and costs is by implementing fixed-term agreements instead.

Furthermore, one should also keep in mind that procurement outsourcing is an avenue that can be explored if you feel that your company’s main focus should lie with its core business objectives.

No matter how you look at your company’s overall strategy, viewing your procurement strategy takes a fundamental shift in perception, however, if you are prepared to make that shift, your company will become much more profitable and sustainable as the correct procurement strategies and procedures are a significant driver of growth and profit in any company.

Should you have any further queries on how you can save costs, time and money in your business, contact our new procurement law department for further assistance.

  • [1] Article by Sean Kolenko at Spend Culture – How procurement can make your business profitable dated:
    4 September 2014

This article is a general information sheet and should not be used or relied on as legal or other professional advice. No liability can be accepted for any errors or omissions nor for any loss or damage arising from reliance upon any information herein. Always contact your legal adviser for specific and detailed advice.