INPROVA
Why procurement should be part of budget setting
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Love it or hate it, we are heading into budget-setting season again.
Whether you are zero based or incremental, building a good budget forms a key part of planning and delivering every aspect of a business, whether that’s a public or private sector business. However, by not including procurement within the process, many are failing to make the most of the resources, knowledge and data that they have available to them. Procurement is so deeply involved in spending and contracts across the whole organisation, that excluding it from the budget-setting process is an own goal.
At Inprova we understand that including procurement can help companies build a better budget. Here’s just some of the reasons why procurement should be integrated into the budget setting process
Spend Patterns & Behaviours
Rather than looking at the last year’s budget and tinkering around the edges for the year ahead. Procurement can support a review of the previous year’s spend and contractual costs to make the budget more accurate simply by understanding the cost of supply. This can also identify areas where expenditure is changing and the drivers for it to that procurement can take this information and look for ways to improve its terms with current suppliers or look for new ones.
Cost control
A good procurement team understands the supply chain, the market and they know how the costs are built and where savings and additional value can be added. Whether that is by leveraging closer supplier relationships, negotiating better payment terms, and locating new suppliers with better rates. There are lots of factors that affect supply chain costs beyond the simple price of supplies, and procurement often has insight into these matters.
Collaboration
Budget planning and regular review meetings throughout the year provide a great opportunity for the procurement teams to interact with their internal customers and key stakeholders. These meetings offer a chance to discuss future business needs, new suppliers, contracts and supplier management matters, and other project components. Understanding this information allows Procurement Teams to better forward plan, manage resources and ensure their stakeholders get the best support for their procurement projects.
Risk Mitigation
Regularly reviewing spend and increasing visibility of it will allow teams to highlight potential risks in the supply chain. Procurement teams can provide insights into supplier performance, which can help to influence budget decisions, such as renewing contracts, negotiating improved terms, or creating alternative supply options as a way to mitigate risk.
Compliance & Added Value
Procurement teams are responsible providing the assurance that their organisation is compliant to its own policies and procedures as well as the external regulations on procurement. Their participation in budgeting helps ensure that budgets are aligned with these rules and spend is regularly monitored and appropriate action is taken. This all creates a culture of compliance by default, allowing procurement teams to identify and deliver more added value, efficiencies and savings through opportunities for innovation, cost reduction, and process improvement. We have a range of consultancy services that can support you in your strategic budget setting. Simply fill in the form to find out more.
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Let’s explore how we can help you unlock these benefits and more. Contact us today to see how our spend analysis services can transform your procurement strategy and drive tangible results, simply fill in the form on the top and we will be in touch.
We have a range of consultancy services that can support you in your strategic budget setting. Simply fill in the form to find out more.
