As we’re approaching the end of 2021, many businesses are finding some disappointing profit margins. With the volatility of 2020 and 2021, it’s likely that your profitability suffered. While we can’t predict what will happen in 2022, one thing we can do is offer some tips for effective cost management strategies. Many businesses spend more on supplies and vendors than they actually need to, which causes extra spend and less profit.
The go-to blog for spend management best practices, that provides articles and videos on achieving cost savings and managing suppliers, as well as insights into how to be the most effective purchasing department for your business.
Failure to plan results in a plan to fail as they say.
Spend Management is really a combination of a number of key tasks in an organization including the following:
Running a business is stressful, time consuming, and complicated; riddled with issues and challenges. While business can be complex for the leadership team, it can also be complex for management and staff as well. When our teams run into problems, more often than not, they try to solve the problems as quickly and as effectively as they can. Management teams may even thank their employees and encourage them to repeat that same level of initiative again. While the staff are well-intentioned, they might be inadvertently adding to the overall complexity of the business and possibly adding risk to the enterprise.
Organizations frequently embark on cost reduction initiatives across their enterprises. Some organizations handle it at the corporate level, while others have Purchasing Departments whose responsibility is to get the right product or service to the right location at the best cost. In either case, one common question always arises – where are the cost savings? Where can I see them? Frustration can occur if visibility is not shed on the challenges inherent in this process.
Most organizations are realizing the true value of high performing purchasing functions now more than ever.
Managing your supplier expenses is critical to your profitability. If you have ever read or heard about the “Iceberg Principle,” you know that people can tend to focus their efforts on the “visible” part of an iceberg and neglect to see the dangers of the “invisible,” in this case, the size of the iceberg under the water line. What does the “Iceberg Principle” have to do with the management of supplier expenses in a dealership?