Control Company Costs

5 Steps to Supercharge Your Organization’s Purchasing Power

Kathryn Kamin |

Over the past few years, as priorities have changed and margins and budgets have tightened, organizations have looked for more ways to save money and maximize the value of every dollar they spend. To help identify potential areas for cost savings, many are examining how they handle purchasing.

For organizations that don’t have a formal procurement department or an employee dedicated to purchasing full time, employees who make purchases on behalf of the organization as a small part of their jobs represent a big opportunity for savings. These employees may be unfamiliar with your organization’s purchasing program, not understand supply chains, or know how to maximize supplier relationships, which can lead to unnecessary spending and lost time returning items or justifying expenses—time that could be better spent making core contributions to the organization.

How can you overcome these challenges to better manage and oversee purchasing across your organization? Taking the following steps can help:

 

1. Lay the groundwork

Organizations without official procurement departments often lack established procedures to guide employee purchasing. To keep your employees on the right path when purchasing, you’ll need to set clear ground rules. Create policies that outline how your organization expects employees to select and manage suppliers as well as make purchases. Be sure to consider all the situations in which employees may need to make purchases, from those working in the office to employees traveling for business or working remotely from home. Your policies should also account for the different types of purchases your team may need to make, such as office supplies, meals with a client, or hotel and airfare reservations.

 

2. Build a purchasing dream team

Once your organization’s policies and procedures are in place, it’s important to train your team. Educate employees on how to research and select new vendors and suppliers, take full advantage of existing supplier relationships, and make the most cost-effective purchases. Boost compliance by keeping it simple. Your system should guide users step-by-step through the buying process, from choosing suppliers and getting approvals to making the purchase.

 

3. Explain the “why”

Employees are more likely to follow purchasing policies if they understand the reasons behind them. Share information with your employees on your organization’s corporate strategy, priorities for spending, and process for working with suppliers to give employees a better sense of how their purchases fit into the big picture. Does buying from preferred suppliers help your organization meet environmental, social, and corporate governance objectives; follow regulatory requirements; or benefit from negotiated discounts? When employees buy into your organization’s goals, they will get behind your purchasing policies, too. 

 

4. Streamline with technology

The right technology solution can centralize all purchasing across your organization for better management. This is especially important for a hybrid, remote, or geographically dispersed workforce. Using a single platform to pull in and manage all transactions gives you a high-level view of purchasing behavior and valuable insights you may have missed otherwise. It also helps you spot duplicate, wasteful, or unnecessary spending; uncover areas for possible cost savings; and identify potential preferred suppliers.

 

5. Listen and learn

Nothing is perfect, especially not the first time around. Honest input from users is essential to making your revamped purchasing policies and procedures the best they can be. Continually gather feedback from employees about what’s working and what’s not. Use that constructive criticism to fine-tune your policies and processes, building on your successes and addressing any problems. The outcome? Better spending management, enhanced efficiency, and improved compliance with your purchasing policies.

 

Even small purchases can result in big savings when they’re properly managed. Developing purchasing policies, training employees to follow them, and taking advantage of technology to simplify and streamline purchasing can help you better oversee and manage spending across your entire organization.

Want ideas to share with your employees on how to select and manage suppliers and make more cost-effective purchase decisions? If so, download the our tip sheet Level Up: 8 Tips to Boost Employee Purchasing Power.

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