In these tough economic times, many companies are reducing or suspending their spending. Even companies that are doing well are trying to reduce spending so that they continue doing well. Reducing cost does not always mean you should cut back on purchasing. Companies should not necessarily reduce spending but should work their procurement process to the fullest.

Utilize Best Practices

When looking to spend money, we must practice good business ethics. This includes asking:
• Will this purchase benefit my company? 
• Will this purchase benefit my stakeholders? 
• What is the ROI on this purchase? 

People say that you must spend money to make money. What they should say is that you need to invest wisely to make money. Spending money should always have a ROI (Return on Investment) tied to it.

Company, departmental and personal goals have been set for the year, and now in early Q2 is time to analyze what procurement is needed to accomplish these goals. Hopefully you have budgeted these procurement items, and now is the time to go forth and acquire them. I spend this time taking inventory of what I have and comparing it to what I need. I use our procurement process, which entails working with the purchasing department. I talk with other key managers and see if we can combine our efforts to acquire better deals. I have found that simple communication among cross functional teams can really gather purchasing needs and help lower costs with a single purchase rather than having multiple purchases through the year or throughout the different locations.

An example of this is monitors. Take your standard monitor; as people join or leave your company monitors are swapped around. Some people have large bulky ones and some people have sleek flat screens. There are normally a few new ones being ordered all the time across the company. If you talk to everyone and figure out how many you buy a year and buy that amount all at once, you could save a large percentage. Some people may say that you should not spend that amount all at once. Maybe, maybe not, but the reason I went with monitors is this; if you get a good discount in volume, then the total cost is lower. If the total cost is lower, then the ROI is faster. As time goes on, technology inherently gets better. Today's flat screen monitors use a fraction of the power of monitors three or more years ago did. The savings in electricity could put the ROI in under a year. So what did this large procurement do for your company and stakeholders? It lowered the total spend, with even more future savings possible. It gave people more workspace and a better device in which to work on. It also helped reduce the overall eccentricity used, and having a smaller carbon foot print is always a great thing.

This is just one example of where communication and a strong procurement process can add true value. Another area that can be a quick ROI can be preventative maintenance. Most companies have one or more contracts that deal with preventative maintenance. Sometimes these contracts are the best way to perform upkeep, but you really need to spend time analyzing these contracts with the procurement department. You may find that a group of widgets is under warranty for $60 a year, and your historical records show that the item needed to be replaced twice in the last two years, so a cost of $40 was spent. So where was the other $20 spent? A lot of time inspection, cleaning and basic maintenance is all you get. So if you were to spend $10 training someone internally to maintain this, you could have saved the company $10 in this scenario, maybe more. Plus, you have empowered your employee and your company will reap the benefits.

Being an IT manager, I evaluate a lot of items and this helps me have a great grasp of what to budget and what items to procure. Being in an ever changing industry and being focused in Information Technology, I have to work very diligently on procurement. Spending is a must for me and the success I help bring to my company. A lot of people take the procurement process lightly, but when used affectively you can purchase what your company needs and be able to show a great (ROI) Return on Investment.