Welcome to another installment of Whitepaper Wednesday here on the Purchasing Certification Blog. In today’s installment, I’ll be reviewing a whitepaper entitled “10 Secret Strategies To Recession-Proof Your Business” from Coupa.
While this whitepaper is geared towards company executives, there are some good nuggets for procurement professionals, though not all strategies will be within your control. However, if you can suggest using those strategies that are within your control, your management may recognize your efforts and positive results can be delivered. I’ll discuss those procurement-related strategies/secrets…
Secret #1. Really Monitor Non-Payroll Spending – If you haven’t been asked already in this declining economy, senior management will likely soon be approaching the procurement department asking “Where are our opportunities to save money?” I hope that you have developed a good spend profile by now or at least done some type of spend analysis so that you can be confident in answering this question. You need to know where the spend is to know how you can best impact the bottom line.
Secret #4. Get Rid of the Supply Closet, or Start Managing Inventory – The whitepaper correctly points out that “As a business grows, ‘pockets’ of excess non-essential goods begin to build…Inventory costs money. There’s overhead on the space that is needed to store it, and it uses up cash that could be used to pay salaries or buy other products and services.” Even as a smaller organization, I see the tendency towards overbuying supplies when procurement doesn’t manage inventory. Procurement needs to step up and introduce inventory management concepts like safety stock, reorder points, and optimal order quantities. I can guarantee you that end users will not do this on their own. And the organization’s cash will be tied up in a 5-year supply of freakin’ Post-It Notes and pallets of copy paper when it has trouble meeting payroll.
Secret #7. Look for Alternatives to Capital Spending – The whitepaper says “To state the obvious, a sharp downturn is a risky time to buy a piece of expensive capital equipment…it is often more prudent to delay future growth plans and defer these larger expenditures until you are more certain of your own financial forecasts…So instead of expensive CapEx items, look for affordable leases where you must.” Again, your internal customers may not think of this option on their own, so it is a concept that procurement can bring to the table.
So those are just three of the 10 secrets. And I think that they are all valid. The whitepaper – unlike some I’ve downloaded for the Whitepaper Wednesday feature – is an easy and fun read. You can download your own copy from Purchasing Magazine’s Resource Center.
Tomorrow is the Thanksgiving holiday here in the USA, so there will be no blog tomorrow and Next Level Purchasing’s offices will be closed. So, for my fellow Americans, have a happy Thanksgiving. I’ll “speak” to you again on Friday!
To Your Career,
Charles Dominick, SPSM
President & Chief Procurement Officer
Next Level Purchasing, Inc.
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