Unfortunately, to date, many retailers don’t have a clear and structured process of the indirect purchases. About why it is dangerous for your company and how to solve this problem, we talked with Ruslan Uvarovsky, the customer support manager of Precoro.
Ruslan, tell us, what problems do retailers face when organizing indirect purchases?
There are two big problems that are worth mentioning.
First of all, this is the lack of a system for confirming purchases by management and the absence of clear budget limits for the indirect purchases. It complicates the control of this process and can significantly increase costs.
And the second is the lack of opportunity to analyze purchases. So, the company does not have a clear understanding of what, in what quantities and when it was purchased for which locations, how much money was spent for it. As a result, the company loses the ability to forecast trends and make operational decisions.
How can we solve these problems?
First of all, you need to create a limited catalog of orders with the goods of certain suppliers. The directory should become a single source of goods from which you can add to purchase requests. This catalog will save the entire history of orders, which the company can easily analyze.
Next, management needs to set a budget limit, which location managers will not be able to exceed. Thanks to this limit, it is possible to over-raise the budget impossible.
The process of procurement systematization also allows ооо to analyze this process. The analysis lets you understand the features of procurement for locations: whether they make the right orders, whether they spend money equally, what can be refused and where to cut costs. Based on the report which is automatically compiled by the platform, you can analyze expenses by cost category (office supplies, cafe, household chemicals).
The process of ordering indirect purchases provides clarity and order.
How difficult is it to change this process?
Based on the Precoro team experience, absolutely not difficult. If the company is small, then the setup of the platform is spent about five days, if there are a lot of locations – about a month. The program is very accessible in use. Everything is fast, easy, but at the same time very effective.
How will indirect procurement processes change after their automation?
I think we can distinguish four aspects of the changes.
The first is the time savings of employees since it is possible to make purchases with the help of a systematized program very quickly.
The second is the possibility of setting a spending limit on indirect purchases, which will help reduce the company’s expenses.
The third is the creation of a clear hierarchy of approval of purchases, which will allow the company to control purchases in real-time.
And, finally, the fourth is the ability to analyze reports automatically compiled by the platform to make forecasts.