cost savings

The New Era of Procurement

What do you think of when you think of procurement? If you are like many people, you think of cost savings and/or contract negotiations. But the new era of procurement has become more strategic in nature. Procurement professionals can not just look at old price and new price anymore. They need to understand the total cost of ownership. 

At Procurement Concepts, we believe that you get what you pay for, especially in the professional services industry. Let's use law firms as an example. To simplify this, imagine your company is owed $1 million by a client who refuses to pay. You solicit bids from 3 law firms.

  • Firm A: Proposes an hourly rate of $150/hour and estimates 150 hours ($22,500)
  • Firm B: Proposes an hourly rate of $200/hour and estimates 200 hours ($40,000)
  • Firm C: Proposes a $300/hour and estimates 250 hours ($75,000)

Before answering the question, we highly suggest looking at the probability of success and the reputation of the law firm. Ask the firm a few questions around performance and service levels. For example, based on historic data, what is the probability of recovering all $1 million? What other fees will we incur (mileage, copies, filing fees, etc)? Who will be working on the case (partner, associate or paralegal)? How can we  be sure your firm won't bill more than the proposed hours?

What if firm A is able only able to collect $500,000 within the hours proposed? Then your company nets  $477,500. If Firm C is able to collect all $1 million within the hours proposed, paying the highest price of $75,000 is definitely worth it.  In our experience, many companies would just look at cost (and would have selected firm A).  

In addition to costs, Procurement Concepts analyzes service levels, performance requirements, and success rates for our clients. Please let us know how we can help your company reduce costs while increasing performance!

Let PC Manage Your Vendors

Many small- and medium-sized companies and organizations that have joined Procurement Concepts are finding the management of the vendors and pricing to be the biggest reward from this free membership. Currently, Procurement Concepts offers memberships for savings with Staples, Priceline, Expensify, and Banc Certified Merchant Services, but our vendor management is not limited to these companies. We can negotiate with and reach out to any vendor your company has to deal with and because of our background in sourcing management; we are excited to take this hassle off the plate of your swamped managers.
 
The group buying model is beneficial for many reasons, but saving time and headaches was an unintentional added benefit discovered through our management of vendors and negotiation of contracts and pricing on behalf of all our members. Each member has their own reasons for using Procurement Concepts’ buying model, but the feedback about how easy it has been for their office managers has been the most consistent feedback we’ve received across all industries.
 
Every 3-5 months Procurement Concepts works with our vendors to improve our programs and benefit our members even more by creating more savings or adding SKUs to the discount list. Using technology to simplify the process has always been our goal and we continue to manage our vendors on this process to continue building technology based platforms and executing our goals for improved portals for the customer to use.
 
Give one of our programs a try today. It is completely free and the benefits of our programs will easily make an impact on your business practice.