• Lack of Procurement business strategy
• Lack of methods, Process and system
• Lack of trust with supplier/contractors
• Lack of technical know-how in procurement
• Lack of competence in procurement manpower

• Reduce the cost of products and services
• Identify new sources of procurement related revenue
• Leverage organization buying power
• Meet or exceed customer expectations
• Increase spend with local suppliers
• Increase spend with diversity owned suppliers
• Update internal processes and redesign to improve efficiency, increase compliance and improve customer satisfaction

Benefits to project by cost saving

• Upfront cost savings by purchasing things at the best price
• Back end savings by enforcing warranties etc
• Cash flow by extending payment terms

• Sourcing things in a manner that ensures that quality inputs are provided on time
• A robust supply chain that delivers in the face of unknown risks (natural disaster, financial crisis etc)
• Financial compensation for the impact of a vendor not delivering within parameters

• Sourcing innovative products
• Innovative commercial models that align suppliers and/or allow the company to take advantage of things that wouldn’t normally be available.
• Competitive advantage by locking up exclusivity.

• Service Quality (Reduction in rejection ratio and lead time)
• Strategic sourcing
• Inventory optimization through cross-functional collaboration with customers and suppliers
• Technological innovation
• Cash conversion cycle (payment terms extension)

Procurement and contracting strategies to reduce buying cost

• Procurement through expert and techno-commercial professionals to focus TCO
• Understanding basic cost drivers in product before Procurement
• Product Cost analysis

• Direct network with more than 5000 manufacturers
• No medial man margins
• Guaranteed Quality products
• Better service due to B to B transaction

• Direct network with more than 3000 quality and high skilled professional Contractor
• Improved quality of Work
• Good safety, Housekeeping and documentation

• Alternative and cost effective material sourcing
• Improves quality and reduce cost

• Low cost country sourcing
• Long term rate contracts with manufacturers
• Sourcing at right time and from right source

• Consider whole life cycle cost instate of Procurement cost
• Reduce number of suppliers and improve efficiencies of existing suppliers via supplier rating methods
• Encourage and assist new suppliers into market to increase completion and cost reduction
• Identify the optimal delivery options for professional services whether it is outsourced for in-house or a combination of both
• Reduce total cost incurred by procurement functions through new procurement techniques like on-line bidding, reverse auction or in-panels of suppliers

Procurement outsourcing advantages:

• Lower transactional procurement cost
• Opportunity for head-count rationalization and refocusing on strategic areas
• Improved opportunity for market intelligence and supplier intelligence
• Improved spend visibility
• Improved pricing
• Increased opportunity for transformational initiatives across people, process and technology
• Increased opportunity for process standardization and application rationalization

Efficiency improvement in Procurement

Best Business Practices in Procurement

• Define procurement function with objectives and goal
• Aline best professional people in procurement function
• Make process, system and technology works for an organisation
• Establish alliances with key suppliers
• Engage in collaborative strategic sourcing
• Focus on total cost of ownership (TCO), not price
• Contracts must be under the Procurement function
• Optimize company-owned inventory
• Establish appropriate levels of control and minimize risk
• Take "green" initiatives and social responsibility seriously