back to the main page

Use These Five Strategies to Save Money During the Recession
Procurement plays an important role in reducing costs and maintaining profit margins in all economic climates. But during extended economic downturns, procurement can drive savings needed to offset revenue declines to maintain financial performance. Here are five tactics procurement professionals can deploy to help their companies weather the recession:

• Adopt strategic sourcing applications. The right mix of strategic sourcing technologies and policies power online negotiations that are faster and more effective than traditional manual processes. Savings can range from 5 to 50 percent price reductions compared with tactical buying approaches, according to industry estimates. For organizations not using them, adopting technologies for strategic sourcing should be a top priority.
• Eliminate paper invoices. By replacing paper invoices, organizations can more easily reap early-payment discounts, which can total 2 percent or more of purchase price. But how? While EDI networks facilitate electronic transactions with close trading partners, organizations aren’t sure which technologies facilitate electronic transactions with small or infrequently used suppliers. The answer is to combine the use of networks with Web-based supplier self-service portals. These portals provide electronic ordering, shipping, and invoicing capabilities that can eliminate paper. In the Oracle family of applications Oracle E-Business Suite’s iSupplier Portal and Oracle’s PeopleSoft Enterprise Supplier Portal/eSupplier Connection support these functions.
• Float cash wisely. The flipside of taking early discounts is knowing when to extend payments to maintain optimum cash position to accrue interest-related benefits. Procurement executives should work with finance managers to determine a practical definition of “on time” payments based on differences in each supplier’s relative cost of capital and their ability to enforce early payment discounts. For more details see The Value of Cash and Procurement white paper.
• Focus on cutting SGA expense. There are often untapped cost-reduction opportunities in sales and general and administrative (SGA) expenses. Adding a self-service electronic requisition tool can help reduce unnecessary purchases and off-contract buying. Likewise, broadening the use of existing requisitioning tools into less traditional spend categories can create new savings. Expanding employee self-service to expense management can uncover savings opportunities in T&E that reduce costs while improving quality. In addition, streamlining manual, paper-intensive procure-to-pay processes can mean headcount reductions or staff reassignments to more strategic areas.
• Liquidate ill-utilized assets. Distressed inventory and assets strain an organization’s finances by tying up precious capital in unproductive areas. Purchasing organizations can take the lead by helping organizations identify sources of and markets for underutilized assets like old equipment, inventory, or finished goods. One source of hidden assets that should be targeted is accounts payable (AP) records. Analysis of AP data often reveals overpayments and duplicate payments to suppliers. Organizations can get their money back with help from asset recovery firms that specialize in detecting and recouping overpayments. Complex service categories, like telecommunications spend, are a great place to start looking for overpayments.

back to the top

Procurement: Video on the city of Edinburgh

Oracle Procurement Applications—All Product Lines

Oracle Advanced Procurement

Agile Product Cost Management

Oracle's Next-Generation SOA Infrastructure

How Oracle Corporation Uses EMC Information Infrastructure to Control Costs and Increase Efficiency

Oracle Uses EMC Solutions to Power Critical Global Application Environments