Cutting Operating Costs Through Centralized Procurement



In today’s business climate, reducing operating costs and increasing efficiencies are priorities for most facility managers and building owners. Implementing strategies to cut expenses, improve NOI, and streamline purchasing processes is vital to a company’s growth and performance. Fortunately, Raiven has an online platform that makes strategic sourcing and supplier and contractor management easy.

What is centralized procurement?

Procurement centralization and optimization allow facility and property managers to take control of expenses and rein in rogue spending. The aim is to have one department or location that manages all the purchasing decisions within the company.

Without proper management and guidance, employees are on their own to figure out how to order building supplies, which can wreak havoc on budgets and NOI. When employees purchase items without clear guidelines, outside the company’s purchasing parameters, expenses spiral out of control, and are difficult to get back on track.

Pros of centralized procurement include:

  • Improved efficiencies through consolidation of suppliers on an online platform
  • Strategic sourcing to gain greater discounts on routine purchases
  • Easier management of qualified suppliers
  • Less rogue spending
  • Greater transparency across business verticals

Implementing a centralized procurement platform and utilizing strategic sourcing can save money and simplify the way routine purchases and other business activities are conducted. Employees benefit from a simpler, more structured process that is clear and within your company’s purchasing guidelines.

Introducing strategic sourcing is a no brainer

Strategic sourcing is a method for businesses and managers to analyze spending within the organization, continuously find the best deals on supplies, manage and cultivate relationships with suppliers, and ensure compliance. When introduced successfully, it offers great benefits, such as:

  • A better understanding of the entire supply chain
  • Improved cost savings in the short and long term
  • Contracts with the top suppliers in the industry
  • Performance metrics to optimize your sourcing program

When implementing a strategic sourcing program in your organization, there are several things to consider:

  • Understand your current spending practices and actual expense numbers. This will enable you to make the best decisions for future spending. Are you tracking spending and the protocols around sourcing? Having this data is crucial and will help you roll out a sourcing program with fewer snags.
  • Get familiar with your supplier network. Understanding the key players in the maintenance, repair, and operations supplies (MRO) realm is important so that you can negotiate sweeter deals for your business.
  • Analyze the performance of your supplier network. Ensure that your contracted suppliers are holding up their end of the bargain and maintaining compliance. When discrepancies come up, address them immediately, and, if needed, research other suppliers that can meet your expectations.

Now more than ever, businesses are looking at ways to increase savings to support a larger NOI. By unifying material purchasing and reducing operation costs, property managers can put their assets to work, increasing profits without much upfront cost. Without understanding existing systems, growth cannot occur, and property owners may find their profits suffering. With a robust online purchasing platform like Raiven, you can run strategic sourcing and contractor management from a single location.

How does centralized procurement solve rogue spending?

Rogue spending may provide a short-term solution for a multi-family property manager. However, the long-term impact of rogue spending outside a discounted supplier can be severe.

With no planning, employees will follow easy methods that are the quickest to do. This lack of direction ruins a budget and harms a building’s NOI. Spending on random, one-time suppliers can be hard to track. You also lose out on the savings volume purchases can offer. Building relationships is a big part of procurement. If it is ignored, businesses can lose out on the benefits offered by industry-leading suppliers with the quality that other suppliers lack.

Here are the pros of centralized procurement:

  • Merging systems leads to greater efficiency, especially when using an online platform.
  • Define routine purchases to obtain better discounts.
  • Remove rogue spending, boosting transparency in the purchasing process.
  • Access to higher quality suppliers.
  • Avoid costly supply chain delays.

By creating a procurement system for your employees, you can save money and enjoy the benefits of an easy-to-manage purchasing process. Your buyers will benefit from an easy process with guidelines that remove the guesswork from purchasing materials.

Strategic sourcing made easy

Centralized procurement is a strategy that helps remove unnecessary expenses like rogue spending by giving all purchasing power to one individual or department within a company.

With a central purchasing group, you can manage spending analysis, source the best quality materials for the best prices, and build relationships with reliable suppliers. By committing resources to this area, you can explore these money-saving goals:

  • Gain specific supply chain data. A purchasing team can better understand the supply chain and avoid costly delays.
  • Achieve greater cost savings. By taking the time to research availability, shop around, and build relationships, a purchasing team can realize long and short-term savings.
  • With enough time spent, teams will find top industry suppliers, and business can be shifted towards those suppliers, giving you the benefit of quality.
  • Checking previous data can help create rules to organize the business’s material sourcing program.
Key points for a strategic sourcing plan:
  • Define current practices and what the actual expenses are. With this information, you can build a solid base to plan future spending and see how you can save money.
  • Understand your supplier network. Knowing what is available to you from different suppliers can help you get the best deals for your business.
  • Review satisfaction. Making sure providers meet needs and fulfill compliance on their end is crucial to maintaining your expectations. Address any problems quickly, and if necessary, research new suppliers.

Saving time and money

Facility managers routinely purchase building stock, cleaning supplies, maintenance materials, PPE, tools, and other essentials, looking for the best deals in order to save money. The beauty of Raiven’s platform is that suppliers are grouped in a marketplace, and through economies of scale, better rates are negotiated for the benefit of all purchasers.

Automating and centralizing these routine processes saves time and increases efficiencies. Employees will not need to surf websites like Amazon to source items when they have a clean marketplace that allows them to choose from nationwide suppliers, like Grainger, Ferguson, and Office Depot. Purchases are made securely and quickly at the best pricing available.

When employees shop online using Raiven’s browser extension, they are alerted when a better price is found from one of their preferred suppliers. This leads to improved decision-making, time and money savings, and increased productivity. Raiven works on a variety of websites, including Amazon, showing employees where they can purchase the item from one of your approved suppliers, bringing your buyers back into compliant purchasing.

Following these best practices will have a positive impact on your bottom line and will also tie together other facets of your procurement program, such as supplier consolidation and compliance.

Supplier consolidation

Managing one supplier can be challenging, but trying to manage tens or even hundreds of suppliers is extremely difficult and usually results in issues that escalate into major problems and headaches for your team. It also takes up precious time and resources.

A vast supplier pool typically stems from good intentions. Team members want to onboard suppliers that they built solid relationships with at previous places of employment. However, if several employees take this approach, the result will be an excess of suppliers in the system, and inevitably, many of them will end up being overpriced underperformers.

The importance of supplier consolidation

Having a limited number of vetted suppliers that are proven performers and can provide cost savings to your business is essential. As a property manager, there is no need to waste time with suppliers that do not give you the best benefits for your money. Ideally, you want a limited supplier base that has been thoroughly vetted, qualified, and approved by management.

Consolidation simplifies the process and can save you money

Here are a few benefits of consolidating your suppliers with Raiven:

  • Transparency - See exactly who the preferred suppliers are, and understand their pricing and offerings.
  • Only top-performing suppliers are picked - No need to worry about whether your suppliers will come through for you. They have already been vetted and given a score.
  • Increased purchasing power - With a limited number of suppliers, companies can push a higher volume of orders to each supplier, which will generate bulk discounts for your company.
  • Time savings - With fewer suppliers to manage, you can direct your precious resources to other business endeavors.

Let Raiven help your business centralize, optimize, and consolidate

Understanding and implementing a centralized procurement and supplier consolidation program will transform your business, optimize efficiency, and save you money. When looking to cut costs across your organization, these are key areas that cannot be overlooked.

Take advantage of numerous benefits, like the ease of purchasing, preferred pricing from select suppliers, and smoother management of contractors and compliance, all through Raiven’s innovative platform. Discover how Raiven can help you centralize, optimize, consolidate, and increase NOI today. Reach out today to get more information or schedule a demo.

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