Innovative Solutions for Business Profitability

Use the current economy to your advantage December 11, 2008

The current business downturn can be used to your advantage in analyzing your vendor pool and encouraging greater competition.
Take a look at your procurement processes. To begin, generate a quick flow chart on how goods and services are being ordered.
1) Do you have a procurement card system – how is it structured, monitored and audited?
2) Is 85% of purchases competed and approved in a hierarchial manner and does the procurement department have veto power? Are all big ticket items, $5,000 or more competed on a regular basis among seven or more suppliers and approved by the procurement department.
3) Is there an ROI generated on all capital purchases.
4) What percentage of purchases are turned down.
5) Is expense reimbursement conducted according to a defined company policy and IRS rules.
6)Do executives utilize their credit cards in a responsible manner (see #5 above)

If you no on any of the above questions, you have (or will have) problems in the future. There are additional questions which can also be asked and independent oversight needed –  I recommend both an independent committee (audit committee) as well as an outside consultant.

The independent committee allows financially minded people to vaidate the company is not only focusing on their stated strategic direction but also is being fiscally responsible doing it. The consultant allows an independent perspective unbound by internal business politics or the “boss” pressure.

Take advantage of the current economy by validating spend and resources. In the long-term it will be the wisest investment you can make.

Solutions Business Consultant specializes in maximizing the efficiency of your company. Fees are reasonable and are based on your specific goals. Send us an email today at steve@costavoidance.org.