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Making the most of Medicare cuts – back to the basics (Part 2)

By Rusty Zosel on Wed, Dec 28, 2011 @ 09:00 AM

iStock_000016260459XSmall-resized-600In Part 1 of this two-part blog, I shared with you critical procurement savings opportunities which you and your company can employ. I continue in Part 2 with this valuable list. Again, I use much of the content found in the on-line article,Procurement Savings – Ways to Increase Your Profits, because it does such a fine job of highlighting what we promote to all of our Buyer partners. I have somewhat paraphrased the list for this blog.

Savings Opportunities Continued

8. Review replacement strategies. 
Item renewal or replacement should be based on necessity, not routine replacement. This may fly in the face of some routine maintenance “best practices,” which in better times, to be honest were more for convenience than savings. Having said that, take care to factor in the cost of waiting for a replacement. While replacing an important machinery part on a regular basis may be necessary, it is not necessary to replace most lights before they fail.

9. Put correct management controls in place.
This is particularly the case for Ad Hoc purchases. Are the right people ordering the rights supplies for the job at hand? This should reduce excess or incorrect purchasing.

10. Train, train, train.
Training your staff on cost-effective purchasing and encouraging them to save money whenever possible can yield significant savings without sacrificing the services your company provides.

11. Computerize the purchasing process.
Procurement automation enables you to consolidate the practices mentioned above and to realize real-time compliance and cost performance. Refer to my earlier blogs about procurement automation and eCommerce Evolution.

12. Link the purchasing system to the inventory and accounting systems. 
From PO creation, to order approval, placement, receiving, verification, and accounting, procurement automation can greatly reduce errors, improve efficiency, and save money.

13. Use procurement automaton to be quicker and to reduce communication costs. 
Purchasers can readily access supplier catalogues and comply with the choice of products that may lead to purchase savings.

14. You may want to consider centralizing disparate purchasing functionalities where it makes logistical sense, which allows for savings in staff, processes, delivery charges, and technology.

Question: What other practices have you discovered that have helped you, or you anticipate will help you, realize sustainable savings?

Happy New Year and may 2012 be a banner year for your team!

Topics: Procurement Automation computerized purchasing process train centralize purchasing management controls replacement strategies