Every business providing goods and services must pay close attention to the sourcing of materials needed in the business process. Procurement involves every activity involved in obtaining the goods and services a company needs to support its daily operations, including sourcing, negotiating terms, purchasing items, receiving and inspecting goods as necessary, and keeping records of all the steps in the process. Procurement involves researching, selecting, ordering and paying for these raw materials required for ensuring the business succeeds.

This week we focus on five tips for effective procurement:

1 Hire a procurement specialist. Procurement is not the same thing as accounting. Hiring a procurement professional is one of the best investments you could make because it can keep you from losing money through your procurement department. A procurement professional evaluates vendors and conducts negotiations. Even if you are tied up with the wrong vendor in a long-term contract, they can help you renegotiate your deal and use good procurement practices to save money.

2 Streamline your procurement process. You need to streamline your procurement process and make it more transparent or automated. While you might think that spending money on a procurement automation platform is only increasing your costs, choosing the right solution will help you save time and money in the long run.

3 Build strategic partnerships with suppliers. There are many suppliers out there, but not all of them are a great fit for your company. Once you find a supplier you have a great relationship with, make sure you keep them close. Strategic partnerships get you opportunities to discuss your procurement needs and budget, and enable you to negotiate the price with suppliers.

4 Associate yourself with other companies to increase buying power. A small business, which relies on technology, has improved its procurement process and has strong strategic partnerships with suppliers, can still fall short of optimal savings simply due to its relatively small size. Inevitably, small businesses have less purchasing power due to lower volumes. A solution to this challenge comes in the form of purchasing consortiums. Partnering with other small businesses can yield volume discounts and achieve savings.

5 Report on a regular basis. Providing reports on what you are spending on a quarterly basis will make your team more effective in finding ways for additional cost savings. For example, reporting could reveal that you are buying office supplies from two different vendors, with the conclusion that it would make sense to consolidate into one vendor.

• NB: Ian R Ferguson is a talent management and organisational development consultant, having completed graduate studies with regional and international universities. He has served organisations, both locally and globally, providing relevant solutions to their business growth and development issues. He may be contacted at tcconsultants@ coralwave.com