All companies are navigating an uncertain market due to high inflation, which challenges the traditional ways companies typically seek out savings.
While inflation usually eats into their bottom line, some companies see it as an opportunity to create a competitive advantage and aggrandize the role of procurement within the organization. Using spend management as a strategic tool can help businesses not only survive but thrive through times of uncertainty. Here are 3 ways procurement leaders can mitigate the risk of inflation and achieve their long-term goals.
Here are 3 ways proper spend management can ease inflationary pressures:
1. Get Clear Visibility into Tail Spend:
Indirect spend, or ‘tail spend,’ is often overlooked as a potential area for savings, however, there are significant opportunities to explore by gaining visibility in this area by identifying categories with rising costs to identify points of inflationary pressure and leveraging this insight to negotiate better pricing and improve terms. Utilizing sourcing tools such as eAuctions can help you obtain competitive pricing outside your network. These tools allow you to directly engage with your suppliers in real time to request new bids and track the success of each submission.
2. Seek Alternative Suppliers and Consolidation:
Fewer suppliers means improved supply chain efficiency, lower costs, and increased negotiation power – all of which impact on your bottom line positively. High-spend items should have cost-effective alternatives for the same categories. Procurement teams can identify alternatives through a Marketplace solution, which helps companies assess supplier risks and those that align with their objectives.
3. Utilize Strategic Sourcing Tools:
Digital procurement solutions with strategic sourcing tools can help procurement teams negotiate better contract terms and secure bids from multiple suppliers. Current economic inflationary pressures have heightened the need for cloud-based tools, like those provided by Simfoni, for your company to gain a competitive advantage. Leveraging sourcing tools such as eAuctions and RFPs create an environment of competitive bidding providing greater transparency and most importantly better pricing. Smart sourcing tools can allow procurement leaders to identify categories not yet impacted by inflationary pressures and negotiate favorable terms.
Download Now:- Supplier Management Handbook
Now more than ever, organizations rely on procurement leaders to achieve internal alignment, communicate with key suppliers, competitively bid, and negotiate favorable contract terms to avoid the damaging effects of inflation. Our sourcing experts at Simfoni can help you mitigate inflationary pressures and achieve your long-term goals.
Schedule a demo to see how Simfoni’s intelligent spend management platform can give you greater visibility into your spend and an increased bottom line.