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A strategic approach to procurement

Whilst most businesses are normally up to speed with the cost and value of raw materials, resale products and human resources there are indirect costs that can be reviewed and any savings run straight through to the profit line.

When budgeting take a look at each line of cost and question your tendering process. From bank fees, insurances, communications, utility bills etc. Don't just insert last years figures without a thought.

We should all recognise that it is not ethical to ‘beat up’ your suppliers, and it will damage valuable relationships. It is the markets that dictate what you should be paying, so you need to test the price and value via a tender process.

Be fair to suppliers – don’t go through a tender process if you have no intention of migrating. Set out clear criteria from the start, if you are happy with the current supplier ensure you include them too.

Offer the final two or three suppliers a meeting and select the solution that meets your value and price objectives.

It is also worth running through the tendor process blind, get suppliers to submit their tenders on plain paper, no brand equity to influence your decision on the facts put before you.

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