It is easy to lose sight of the small amounts of money that are gained and lost in everyday operations. Can B2B Online Marketplaces save or reduce this precious cost?
If you are a car-maker, you must be spending a lot of time, resources, meetings, software, and care in procuring the best wheels, glass panes, and pistons – from the best supplier in the world that meets your needs and deadlines.
But what happens to the office supplies, the light-bulbs and the factory-miscellaneous items that your teams use? The chances are that they are ordered randomly, in isolation, and not given enough attention; because they are not significant expenses. Put them together in a cumulative pot, though, and you would be amazed at how much money and time get wasted in this harmless pocket of daily operations. Indirect procurement may not show up directly on the bottom-line of profits and expenses. But purchasing services or supplies that keep a business running – like an office equipment, fixtures, janitorial services, photo-copier ink, canteen materials, IT services, travel, etc. can still make a huge impact on the company’s overall profitability and efficiency.
Indirect Procurement – A Bucket of Invisible Expenses
Here’s why indirect procurement translates into unnecessary complexity and costs:
1. Most of these are ordered in isolation by different functions and their respective teams as per their individual needs
2. They lack order-control, market-knowledge, and research
3. Negotiations are lax, and deliveries can be unstructured
4. No single pane of glass gives a view into their movement and timelines
5. Pockets of neglect, ignorance and recklessness make them into a huge mountain of avoidable costs as time passes
That’s why companies need an integrated B2B online marketplace. Such a marketplace offers a broad spectrum of benefits to ultimately improve transparency, and profitability by reducing the overall cost.
B2B Online Marketplaces: Making indirect procurement simpler
A B2B online marketplace helps the organization to
1. Get fast and easy visibility for various suppliers, regions, and order-levels with adequate levels of credibility and performance reviews
2. It allows quick market-research, real-time views, and fast connections
3. It adds strengths to negotiations, order-performance, and control
4. It adds elements of control, planning, and monitoring to the procurement process in an intuitive and effortless way
5. It adapts as per categories, supplier-relationships, contract value, and timing
6. Saves significant time and cost
7. It brings all supply chain parties together giving a cohesive view of the entire cycle
8. Save costs usually hidden behind the curtains – like travel, operations, maintenance, repair, and office supplies
9. It accelerates the process of identification of requirements, specifications, and suppliers
10. It adds simplicity to quotations, contract management, and supplier-assessment
11. Achieve economies of scale by consolidating individual procurements happening on an ad-hoc basis or in isolation across the organization
It has been observed that innovative digital solutions in procurement unlock as much as an incremental 3% to 10% in annual cost savings. In a survey of CFOs and financial directors in the U.K. and the U.S. when asked about the role of good procurement in the financial success of their business, 54% of UK finance leaders and 55% of US leaders found it ‘imperative,’ and 44% of both UK and US leaders labeled it as ‘quite’ important.
As you can see, your company can convert indirect expenses into pools of operational speed and profitability.
The answer lies in the pennies that are counted well. Smart B2B online marketplaces like TradeLeaves.com can help you consolidate and streamline your indirect procurement and boost the much-needed profitability.