How can you optimize your purchases?

LPurchasing mapping

The Purchasing process is different for different organizations. Like all processes, it follows several steps which are: the shopping mapping, the identification of the organization's needs, the research and analysis of supplier proposals (supplier sourcing), the negotiation and choice of suppliers, the follow-up of the order and delivery, the payment, and finally the evaluation of performance.

Some organizations miss the first step in this process and are therefore unable to truly optimize their purchases. In this article we will go back to this first major step.

• Identify and segment your purchases

First, you need to identify and categorize all purchases made by the business into different families, subfamilies, and segments. This classification goes beyond the trio: works, services and supplies. Be more specific in your classification, and try to “go down” to the buying segment.

• Categorize your purchases

Second, you need to collaborate with the financial department in order to know the exact expenses for each purchase. Then, by combining the financial data of purchases with your segmentation you will obtain a clear and accurate classification of purchases.

This step is important because it allows you to know how much the organization is spending, and the sources of these expenses. It will then be easier to identify the real needs of the company and to negotiate more effectively with suppliers.

Finally, be aware that this Purchasing mapping can be long, of the order of six weeks. This is why you must first insist to your Management on the future performance gain as a result of this work.