Smart organisations invest in procurement in tough economic times
An economic slowdown presents an opportunity for companies to invest in strategic procurement solutions to bring down costs and drive growth, according to Dan Quinn, Senior Vice President at BravoSolution MENA / Tejari.
According to Quinn, in tough times forward-thinking, smart organisations invest in procurement to reduce spend across all areas of their business without compromising on quality. Even a slight reduction in overall spend which can be achieved through procurement excellence can impact the bottom line for the better.
He added that the savings made can then be put back into smart investments that strengthen a business’s outlook during an economic downturn.
According to strategic procurement tech company BravoSolution / Tejari, the single biggest cost for most businesses comes from procurement. By bringing down these costs, businesses will be able to increase, or replace missing, profits.
“Research shows that on average 60 per cent of an organisations profit and loss (P&L) is made up of third party spend, this is the materials, products and services that companies rely on to deliver their mission. It is the role of the procurement function to manage this spend effectively. Smart CEO’s know that reducing this spend has a disproportionate impact on their company’s economics as a dollar saved virtually drops straight to the bottom line and improves both cash flow and profitability. The trick is building the capability to systematically identify, unlock and critically retain these sources of economic value,” Quinn added.
In March 2017 the Organisation for Economic Co-operation and Development (OECD) said that despite modest pick-up in economic global growth, there are still risks and vulnerabilities that could derail market recovery.
It is here that procurement services can successfully be leveraged for strategic decision making and management resulting in an increase in profits as well as more streamlined business operations, Quinn concluded.