Fraxion's PunchOut integration streamlines and automates purchasing from within your eProcurement software.
How to increase your purchasing power with eProcurement software
Many organizations are not optimizing their procurement process to generate consistent savings. Despite 50 - 70% of their revenue being spent with third-party vendors on day-to-day operational expenditures, procurement is still frequently viewed as a transactional function, rather than a strategic one. Nonstrategic procurement is a missed opportunity to protect your organization’s cash flow and generate sustainable savings.
The result? Purchasing once-off or small product volumes from random vendors, with no thoughtful supplier selection or pricing review, leads to wasteful spending and recurring losses. And this scenario is exacerbated when a business operates across multiple office locations with disparate suppliers.
This scenario can be avoided by using eProcurement technology-enabled best practices to ensure supplier authorization and purchase requisition approval for high-quality products and services from these preferred or contracted suppliers, often at discounted prices. Further to this, eProcurement software can offer the purchasing data and reporting capabilities you’ll need to improve your negotiation position and buying power.
What is buying power?
Buying power refers to your organization’s ability to negotiate lower prices for your business, and gain discounts by buying products and services in higher, more strategic volumes. A good rule of thumb is that the more goods and services you’re able to buy within a single contract, the cheaper the item will be per unit.
However, it’s not always this simple. Small and mid-sized businesses may find that they do not have a need for a high-enough volume of a product to incentivize a larger supplier to offer a price reduction. In these cases, they might find their request denied or ignored.
Oftentimes though, this challenge can be solved with spend or purchase order consolidation.
The first step to raising buying power: spend consolidation
There are a couple ways to approach spend consolidation. The first is to determine if different teams across your organization are making duplicate or similar purchases from different suppliers. With this information, you can consolidate the purchases under the top-performing supplier your business partners with, and leverage the larger order size to negotiate a better deal.
An example of this could be if you have multiple offices buying office supplies from different vendors. Say your team members travel frequently but stay at different hotel chains during trips. Ensuring all employees use the same, authorized hotel chain can help you develop a partnership with that chain, increasing your buying power. The same cost-saving opportunities will apply to frequently used services.
You should also take into account historical purchasing patterns. Note if your business is making regular purchases that can be consolidated into less frequent, larger orders —or if a once-off purchase is having to be made again.
With eProcurement software, your organization gains visibility and centralized access to purchase requisitions and purchase order data, and the ability to submit and approve change orders or PO revisions, simplifying spend consolidation significantly.
How eProcurement software enables smarter spend consolidation
Spend consolidation is a go-to strategy for increasing your buying power, and it often only requires a little planning ahead, making it a logical and cost-efficient strategy for businesses of all sizes.
For small and medium-sized businesses who need more leverage to unlock discounts, eProcurement software can be a highly effective tool at your team's disposal.
Eliminate the need for employees to browse across multiple supplier websites, creating duplicate orders that could be channeled to the same authorized suppliers for a better price, with PunchOut.
This type of catalog integration gives your team access to millions of products from approved suppliers with accurate:
● Business-only rates
● Current discounts
● Product availability
● Related shipping costs
● And item changes
Easy, familiar eCommerce shopping experiences with PunchOut vendors such as Amazon Business and Staples make business purchasing simple. With no need to maintain catalogs and having direct access to real-time inventory details, it’s convenient and efficient, and you can take advantage of fast, convenient shipping and fulfillment services. Your employees can access the platform directly from the eProcurement software application, and submit purchase requests for approval, driving user adoption, while internal controls ensure budget and policy compliance.
Alternatively, or in addition to the PunchOut integration, you can set up internal supplier catalogs with those you have a strong trading relationship with. These catalogs are also hosted within your e-procurement software to ensure all requests are routed for review and authorization prior to the purchase requisition approval, so you can stop once-off purchases and rogue spending in their tracks.
Catalogs are also beneficial for establishing optimized processes that allow your team to:
● Simplify repeat purchases and fixed orders with authorized suppliers
● Set up carts and price lists by project, event, department or category
● Templatize carts for repeat purchases from a master product list with the option to adjust items and quantities on an as-needed basis.
Reporting is not just a means of reviewing recorded spend but also a way to forecast spend and plan for the future. With eProcurement software you can analyze and report on your organization's operational spend, by:
● Budgets and projects
● And any transactional spending
Reporting efficiency gives you the data to identify purchasing patterns and saving opportunities —or where purchasing is eating up a lot of budget —with the source, thanks to detailed audit trails. With granular reporting, you can analyze historical and current purchases to improve your negotiating position to qualify for more favorable terms, such as early settlement rates or bulk discounts.
With this complete oversight of your organization’s spend, you can maintain control over it and seize opportunities to increase your buying power to achieve strategic objectives.
Unlock deeper discounts and price reductions with Fraxion
There are many ways to form and develop vendor partnerships that allow your business to increase its purchasing power and access greater discounts —and eProcurement software can be the vehicle that fast-tracks success.
Fraxion’s eProcurement software offers requisition-to-PO and approval workflows for standard purchasing requirements, or more strategic catalog or PunchOut purchasing, all with advanced reporting capabilities.
Want to learn more about Fraxion’s solution and how it can meet your organization’s procurement, reporting and integration requirements? Get in touch to explore features and smarter ways to save.