There is a lot of money involved with procurement. Every way to save money on procurement is for the benefit of the business. So, if you have the chance to save up to 21%, why shouldn’t you?
Three different kinds of suppliers
Every business has suppliers. Suppliers for your raw materials, but also suppliers for things like coffee and office supplies. In general, we can split these suppliers in three different categories:
A supplier: A suppliers are suppliers for the most important supplies like your raw materials. You have to deal with those suppliers on monthly base. And you’ll receive invoices every month.
B supplier: B suppliers are a little less frequently suppliers, but still important for the business. You’ll use them multiple times a year.
C supplier: C Suppliers is the biggest part of your supplier database and you’ll only deal with them once or twice a year.
The procurement is used to the invoices of the A suppliers. And if the invoice is the same every month, you’re used their payment terms and it won’t be time consuming to pay those invoices. B suppliers are familiar as well. You have arranged special prices and terms. Invoices from C suppliers who are only necessary once or twice a year are very time- and money consuming. Because you’ll have to check each invoice and every supplier from this category have his own payment terms. Mistakes with invoices are easily made in this group.
Save cost by reducing the supplier database
There is a solution to save time and money. Getting rid of the C suppliers who cost you a lot of time and money. By outsourcing the invoice management, the business is able to reduce the supplier base up to 80% by just one total supplier. This will save up to 21% on costs. Not battling with de different payment terms and conditions because with one total supplier you’ll receive one monthly invoice instead.
Indirect procurement is a hidden treasure. By outsourcing your indirect purchasing, also called NPR (Non-Product Related) purchasing, which not support the core activities of your organization, saves a lot of time and money. Instead of all those different invoices, with different payment terms, just one point of contact, one invoice and one payment term.