Fantastic On Four Fronts
Levers provide efficiencies that help you move otherwise impossible loads with ease. As a user of these levers, it’s important to be aware of what levers exist and when to use the right lever at the right time. You’d never use a crowbar, for example, to lift the lid on the Milo tin, just like you’d never try to shift that pile of bricks with a pair of tweezers.
The thing about levers is that they need to be specific for the job!
The right choice
The right lever will enable the almost impossible to happen through its strategic placement. It’s no surprise then that smart business people look for levers to optimise their return on investment.
In the past, procurement decisions were often made on the basis of only one lever – the Pay Less tactic. This lever (often implemented via tendering) is no longer lifting its weight. In fact, research by Grosvenor has uncovered that those organisations using just that one lever are missing out on huge savings.
With a focus on simply paying less to suppliers, organisations are potentially kissing goodbye to 122 percent increase in savings. These people might well be moving that pile of bricks with tweezers.
The Smarty Pants
The smart organisations are the ones making the savings and increasing efficiencies using all four levers of modern procurement.
How do we know this?
Grosvenor makes an ongoing commitment to constantly research hundreds of top procurement organisations in Australia to identify the characteristics of Savings Champions and what success looks like. This research backs up our understanding that a four-pronged approach to procurement is the way to go.
We’ll get to what those four levers are in a moment, but first let’s consider what your organisation is doing and how you’re managing your role. It’s hard to know in isolation, so our invitation to you is to use our digital tool to benchmark your performance.
Leveraging your success
Let’s now look at the four advanced spend levers which, with a considered and weighted approach can deliver significant savings to your company.
We’ll begin with The Pay Less Lever. Keep in mind a reliance on this lever alone will see you miss out on these significant savings. In a pay less scenario, your company could place a single order for widgets (yes, people still need widgets) across the entire organisation, which would drive the price down through the increased spending power the organisation has now.
The Buy Cheaper Lever is all about not spending money on premium goods and services. This lever is used when the team flies economy rather than business class or when the extra modifications and add-ons are not purchased.
The Buy Less Lever is when printing is double-sided or video conferencing is used instead of sending everyone to the conference.
The Buy Smarter Lever is when there are efficiencies in how the service is consumed. This could be a single invoice per supplier per month or business cards in smaller batches so wastage is reduced with staff turnover.
Why are these levers important?
Because there are savings to be made when the right lever is used at the right time, and a judicious blend of these levers has the transformative power to shift your bottom line.
See where you stand
If you want to understand more about your role in maximising procurement savings, try our digital benchmarking tool.