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Best Practices For Procurement Part 3: Prioritization / Timing

2/1/2020

 
By Sandy Chockla, Franchise Owner, Expense Reduction Analysts

Use the spend and contractual information to prioritize which spend categories you look at first.  Typically, you should prioritize the categories that have the highest spend since the same percent savings will have bigger impact to the total savings you generate.  Another consideration is what spend is under contract and when those contracts expire.  You should time your quotations to be completed before the current contract expires so you understand your options.  You don’t want to renew an existing contract without exploring the options available to you. 
 
In some industries, timing of when the RFP goes to market can have a large impact on the success of that RFP.  For instance, transport companies are intensely busy during the busy holiday season so putting an RFP into the market at that time is asking for a poor response.  Knowing enough about the industry to avoid timing mistakes is another tip on how to make your RFP successful.
 
Another thing to consider is how long has it been since you went to market on the various categories.  Most likely, the supplier’s pricing was most competitive when they first won the business.  Over time, their margins will creep up, especially if you have become complacent as a customer and do not regularly go to market to benchmark the prices you are paying.

​Sandy Chockla is a franchise owner and Principal Consultant for Expense Reduction Analysts (ERA).  ERA has a network of experts in more than 40 overhead expense categories which I leverage to benchmark prices, review supplier agreements, and optimize our client’s purchases or services.  This is done without compromising supplier quality or service.  If you would like to have a discussion, you can contact Sandy at schockla@expensereduction.com or call direct at 970-232-4860
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