In one of our last blogs, we reported on what we consider to be the main deficits and problems of procurement organizations. The efficiency of a procurement department is crucial for companies that want to streamline their processes and maximize their resources. We have therefore compiled a list of important and sometimes simple methods for increasing the efficiency of your procurement processes:

1. Centralize supplier management: Maintaining a centralized supplier database is fundamental to effective supplier management. Building close relationships with key suppliers is crucial. Research by AT Kearney shows that high-performing companies that effectively manage their supplier relationships achieve up to 15% lower costs and significantly more innovation opportunities compared to their competitors. [Source: AT Kearney – Procurement Excellence Study]

   Therefore, manage a centralized database of suppliers and their information. This consolidation simplifies communication, negotiation and contract management, which leads to better conditions, significantly improved risk management and lower administrative costs.

2. Standardization of processes: Standardization of procurement procedures ensures orientation, consistency and efficiency throughout the purchasing organization. Develop standardized processes and documentation for procurement activities. Clear guidelines enable smoother processes, minimize errors and facilitate faster decision making. Challenges can include resistance to change or difficulties in implementing common procedures. Overcoming these challenges requires clear communication, stakeholder involvement and gradual implementation. The long-term benefits are reduced errors, better compliance and improved scalability and data use.

3. Implementation of robust technology: Advanced systems such as procurement platforms or eProcurement systems will improve transparency, automate routine tasks and speed up workflows. Implementing robust procurement software or tools (i.e. building on processes that work – not just the „old“ processes) can significantly streamline processes. A study by The Hackett Group found out that companies with best-in-class procurement technology achieve 22% lower cost per order than their competitors. [Source: The Hackett Group – Procurement Key Issues] Furthermore, a study by Deloitte found out that companies using advanced procurement technologies were able to achieve cost savings of up to 18%.

   Once you have reviewed and optimized your processes as described in point 2: Integrate procurement software or tools that support and even partially automate repetitive tasks such as order processing and supplier management.

   Corresponding platforms also help to bring previously unimagined transparency to procurement data. The use of data analytics provides invaluable insights into spend patterns, supplier performance and market trends. Challenges can arise from data silos or the need for skilled data analysts. To overcome these, data sharing systems need to be integrated and investment made in training analysts.

   Adconia’s Digital Value Navigator provides a market overview of the performance of over 150 market providers of eProcurement solutions.

4. Systematization of the approval processes: Streamlining approval processes is crucial to avoid unnecessary delays in the procurement process. Establishing clear approval processes will ensure that decisions are made promptly, transparently and efficiently, avoiding costly „wrong decisions“. Create clear and concise approval processes to minimize bottlenecks. Define levels of authority and empower employees to make decisions within their area of responsibility to reduce delays in procurement cycles.

5. Improving negotiation skills: Effective negotiation can lead to better deals, cost savings and improved supplier relationships. Improving the negotiation skills of procurement professionals is critical to securing better deals and building stronger supplier relationships. Therefore, invest in training programs to improve the negotiation skills or other key competencies of procurement staff, including with external stimulus and input. In this way, you can also counteract the shortage of specialists with your existing team.
6. Introduction of sustainable practices: Disregarding sustainability criteria in procurement decisions will become increasingly expensive in the future and can realistically lead to the loss of customers. The inclusion of relevant criteria will therefore become increasingly important and crucial.

   Look for suppliers with environmentally friendly practices that make a positive contribution to the company’s CSR goals and often offer cost-effective, innovative solutions.

   Challenges may include higher costs for sustainable products or limited availability from suppliers. Overcoming these challenges requires joint initiatives with suppliers and investment in sustainable innovation and communication.

If you need a sparring partner or support with implementation – we will be happy to help.

Adconia – beyond the ordinary

As Adconia GmbH, we advise our customers with the experience from more than 250 projects over more than 20 years – in questions around purchasing, supply chain and the digitalization of processes. Our goal is always to increase the profit contribution of purchasing through cost reduction, process automation or the qualification of our customers’ purchasing teams.

With a correspondingly broad wealth of experience, precise knowledge of everyday purchasing and a high level of professionalism, our consultants carry out training measures at eye level. We do this – depending on requirements – both as a sparring partner for specialists and managers with many years of experience and as a trainer for seasoned purchasing professionals and young professionals.