Procurement Insights is a series of thought leadership articles detailing the contours of emerging procurement trends and developments.
What are some of the prevalent inefficiencies in the current procurement landscape? How ShakeDeal has helped in optimizing procurement for its clients?
Procurement/ Purchase department is no longer just a cost center. More & more companies are looking at this function as a profit center, one that not only brings down costs (adding to the bottomline), but also ensures timely supplies of required materials as per quality standards, thereby maintaining quality of the finished product and directly influencing customer perception.
Procurement personnel are also becoming increasingly aware of this and unlike a few years ago, when procurement used to happen in a decentralised manner through a large pool of local suppliers leading to several issues and inefficiencies like lack of accountability and transparency, non-standardisation of products/ prices, management of a large pool of suppliers etc.
However, there is a rapid & distinctive change being observed in the approach adopted by procurement personnel of several large companies. They prefer working with fewer suppliers, who are seen as partners rather than vendors, which means there is a high amount of trust on these partners and the share of business of these partners is also quite large, leading to an atmosphere of stakeholdership. We have also seen that companies are more comfortable in adopting this approach especially for their indirect procurement needs.
This ensures the following:
1. Partner Accountability with regard to quality, SLAs etc. – leading to ease of doing business for the company
2. Transparency in costs including partner margins, including time bound rate contracts – leading to predictability on costs
3. Door step delivery across locations within the country – leading to centralisation and better control on procurement
4. Higher savings due to working with an aggregator as a partner
5. Consolidation of the vendor base
These partners are usually aggregators or a ‘One-Stop-Shop’ for all indirect procurement needs like www.shakedeal.com.
At ShakeDeal, we work very closely with our customers, understand their requirements, product specifications, usage, frequency of purchase, Last Purchase Price (LPP) & align our systems accordingly in order to ensure that the right product is delivered in accordance to agreed SLAs & at a price which is below the LPP – thereby ensuring savings as well.
ShakeDeal has helped optimise procurement for our clients through the use of our state of the art procurement related algorithm that enables us to get the lowest price for a product from our 5000+ vendors across the country. Our dedicated team of Key Account Managers are constantly in touch with clients to understand their requirements & add value to their business. Some of the values that we bring onboard to ensure value addition to our clients are vendor consolidation of approx.. 60-80%, complete accountability & transparency, Annual rate contracts to insulate our clients from any price fluctuations, Product standardisation, technology enabled process flow, simplified payment terms & documentation and most importantly GST compliance.
How firms are leveraging ShakeDeal to perform the procurement function with some examples?
Our customers have looked at ShakeDeal as a stakeholder or a partner in their business. Each time there has been a requirement from our customers we have developed the required capabilities for being able to fulfil it.
Also, we are ‘ Category/ Industry Agnostic’ meaning our customers are not from just One or 2-3 homogenous industry. We have customers from almost all categories – FMCG, Automobile, Pharma, Power & Infra, R&D facilities, IT companies, Construction and even lifestyle based companies to name a few.
An example of how customers are leveraging us & how we have developed capabilities to cater to all their indirect procurement needs is seen in one of our very large FMCG customers:
We started dealing with them with office supplies & pantry supplies. Next they enquired whether we can help them procure material handling and labour safety related products like safety shoes etc. for their factories & warehouses. We immediately started supply of the same. Post this they enquired whether we can supply Marketing Collaterals for their Trade Marketing, we developed capabilities & vendors for the same and started supplying those as well. During this time, we also got an enquiry for corporate gifting for their large distributors in the form of e-Gift Vouchers which again we procured for them. We are currently also supplying CoVid-19 related safety products to them like masks, gloves, sanitisers etc.
So what started as just office supplies as grown across requirements of different departments of our customer.
How do you think the procurement tech firms are helping businesses in fulfilling their procurement needs in the covid 19 outbreak?
We might see a change consumer behaviour & spending pattern when we resume post lockdown. Businesses might also have an approach of ‘Cautious Optimism’, wherein cash flow would be very critical and therefore businesses might review areas where they can optimise their working capital.
One significant spend area they might review is the amount of investment blocked in inventory holding of raw materials.
They may not want to hold on to very large inventories and therefore procurement tech companies like ShakeDeal can ensure that they don’t have to do so, through regular supply of materials at contracted prices and as per frequency required. This will ensure that investment in inventory is reduced & also manufacturing lines are not disrupted.
The other thing that has happened due to the CoVid-19 outbreak is that it has made a lot of people comfortable with digital payments & using e-Commerce for their household needs. We would also see a positive rub off from this when it comes to more procurement managers now being open to using e-Commerce for fulfilling B2B requirements of their respective companies.
In addition, there would be a huge demand by companies for CoVid-19 safety related products for their employees atleast for the next 3-6 months once they resume operations. Being an aggregator & a B2B eCommerce marketplace ShakeDeal can fulfil these requirements through the large catalogue of CoVid-19 related offerings that we have developed & are capable of delivering these across more than 21000 pin codes within the country.
What role will technology, analytics and E-commerce play in defining the procurement solution of the future?
Technology & analytics will play a very major role in procurement in the future, even now most medium & large companies are relying on procurement based software to help them optimise their procurement.
E-Commerce companies bring a lot of value additions to customers as compared to offline vendors. Factors like customised catalog based buying, guaranteed savings, one-stop-buying solution, pan India delivery capabilities & spend analytics will transform the way procurement managers would approach their function.