Great Tips For Smarter Procurement From ... CNN Money?
Yes, that's right. A recent article in CNN Money about reducing your spending as a consumer, if you read between the lines and focus in on the principles, and not the tips, had some great advice for reducing your corporate spend. It might sound a little crazy, but their article on cut your spending by $500 a month had some tips that, if properly applied, could save your company millions of dollars. Really.
Let's focus in on the first 10 tips.
- Slash Your Grocery Bill
- Shop Once a Week
Aggregate your purchases into fewer orders. This will not only give you volume discounts, but it will reduce maverick purchases ... which is often the greatest single source of negotiated cost reduction leakage in an organization.
- Give Up the Bottle
Bottled water costs a lot more than you think if you add it up. If each person in your office consumers $15 a month worth, and you have a 1000 people, there's $15,000 in instant savings.
- Eat What's Ripe
Just like in-season produce is 20% to 50% less, in-season technology purchases for products being produced in bulk could save you a bundle. Remember that when replacing your cell-phones, laptops, and peripherals.
- Differentiate Between Clean and Dirty
Just like organic produce will always cost $1 to $2 more, "premium" suppliers will also charge more for products that might not be noticeably better. For example, can you honestly tell the difference between an organic and a non-organic onion or cabbage?
- Shop Once a Week
- Ditch your second or third car
Maybe the boss won't let you get rid of the company cars, but do they really need to be driving high-end BMWs on the corporate dime? A lot of car companies are producing luxury cars now for 30K to 40K. Get them a Hyundai Genesis, for example.
- Visit your Local Cobbler
Are you replacing equipment too aggressively? Regular maintenance can often considerably extend the useful life of expensive equipment. There are companies that specialize in the delivery of software solutions that help you monitor and proactively schedule service calls to keep your mulit-million dollar production equipment working efficiently well beyond the amortization period.
- Twitter to Save
While I don't recommend the use of Twitter, there are many commodities and office suppliers that you can buy opportunistically and save a bundle. Just keep your eyes open.
- Time Your Buys Right
Many industries go through cycles in supply and demand. If you buy during a trough, you can negotiate a considerably better deal than if you try to buy during peak demand.
- Stretch it Out
Are you being over-serviced? For example, do you need full janitorial service every night? Think about it ... do you vacuum your living room every night? Train your staff to empty their own recycling and garbage on the way out every night ... because, if your facility is designed appropriately, they're heading out the back service entrance to the parking lot and going by the maintenance room anyway. Analyze the "management consulting" spend and see how much you need. And you could save some big bucks if you can go to a 4-day work-week via either 10 hour days or telecommuting and turn the power off another day a week.
- Get to Work Cheaper
In the corporate world, you want to get to the client cheaper. Enforce travel policies that require advance scheduling and bookings and compliance with policies.
- Step off the Gas
Make sure your trucks don't idle, that their tires are always adequately inflated, that they are serviced regularly, that your drivers are trained to drive easy, and that, where possible, they avoid left-hand turns. Chances are, you can cut your fuel consumption by over 30%. That's going to save you millions if you do a lot of shipping.
- Buy Ink, Not Cartridges
Overpriced, disposable packaging IS overpriced, disposable packaging. Minimize the non-recylable / non-reusable / non-refundable packaging and reduce purchase and shipping costs.
- Reconsider Brand Loyalty
Printer paper is printer paper. Tomato paste is tomato paste. Iron nails are iron nails. Don't pay for a name ... pay for a quality product.
The secrets to smarter spending are more-or-less universal. When you understand what they are, you can usually translate a good consumer tip to a good corporate tip, and vice versa. There will be exceptions, but the reality is all cost avoidance is based on sound analysis and good judgement. Use both, and you'll save. Always.