How can you combine quality, improvement and cost reduction in procurement?

Cost reduction is a key objective for all companies. The role of the procurement department is to source the highest quality goods at the best possible price. Striving to improve product quality while also making cost savings for the company is a real challenge. Here are our tips for achieving this.

Why reduce business costs?

Procurement departments hold a key position in companies. Besides taking the lead in cost reduction and risk management, this strategic function also adds value. By working closely with suppliers, it plays an active role in ensuring the company’s good operational health.

But why should we seek to minimise the cost of quality?

Dealing with the unexpected

If the last few years have shown us anything, it’s that any company, regardless of its turnover or field of activity, can be affected by a crisis. Be it a health crisis or a financial crisis, cost reduction is the most effective lever for securing a company’s process under such circumstances.

Improving short-term profitability

The need to reduce costs may also arise from an internal company issue. When facing a serious setback, spending must be quickly reduced or even halted. In the short term, this helps to minimise the negative impacts and then, gradually, to improve the company’s financial performance.

Sustaining the company in the long term

Even outside of a crisis, companies must keep a close eye on their spending. To generate profit and grow, they must think long-term. Keeping an eye on the cost of quality is a way of remaining competitive amidst ever-increasing competition.

How can you reduce company costs while improving product quality?

Looking to save money is necessary and logical for a company. Its profitability is at stake. However, this should not affect the performance of the products it needs. Indeed, internal failure costs will have an impact on production, employee well-being, the environment and the company’s profits.

The question is, how do you ensure that cost reduction doesn’t undermine quality?

Understanding needs

Taking the time to analyse and understand your real needs is the key to avoiding purchasing mistakes. Products that don’t fully meet the requirements are transported to their destination and then are immediately returned. Returning goods is a significant waste of time and money for companies. Precise targeting of needs is therefore essential before making sales. Making direct contact with the key customer is a way of gaining a better understanding of the requirements.

Implementing performance indicators

Performance indicators are a valuable source of information for decision-making. These include return on investment (ROI). Indeed, the suitability of purchases cannot be properly assessed without taking this indicator into account. The quality of the products that directly affect the company’s productivity should not be neglected.

Thinking long-term

Inexpensive, entry-level products are rarely designed to last. If the purchase price is low, the long-term costs are likely to be high. This is because a product with a short lifespan will need to be replaced more often. It will therefore have to be changed much earlier than planned and this will have an impact on the end cost of the operations.

It makes much more sense to opt for reliability and durability. At Manutan, performance goes hand in hand with cost reduction. Our products come with a 10-year guarantee and offer excellent value for money.

Buying the right amount

Ordering in bulk reduces costs through discounted prices, so take advantage of this! However, requirements must be properly assessed to avoid dormant stock. Overstocking represents a loss to the company. Effective inventory management is therefore essential.

Choosing the right suppliers

Suppliers are now real partners for companies, providing considerable added value. For effective risk management, opt for trusted suppliers whose quality of service meets your needs, such as compliance with delivery times. If these are not met, your company’s production will pay the price.

Reducing the number of suppliers helps to lower management costs and fosters a close relationship between you and your service provider. Through personalised prevention and advice, your supplier can offer you solutions that are perfectly tailored to your needs.

Improving the quality of corporate procurement

A company’s purchases can weigh heavily on its budget. Reducing spending and improving quality is an entirely realistic goal for any department. Furthermore, there are many benefits to be gained from a value-for-money procurement approach.

Product quality

Expensive products are not necessarily more reliable. Private label products are less expensive than premium brands and offer several advantages:

• They are better value for money;
• They help to reduce costs

Companies that make this choice save money while benefitting from quality equipment.

Improving performance

Working with reliable and durable products allows employees to carry out their work in better conditions. This improves their daily well-being, which in turn has a positive effect on their performance. This is reflected in the company’s turnover.

At Manutan, we’ve developed our own range to offer you the best value for money. Discover 5 good reasons to choose the Manutan brand!

Corporate social responsibility

Shifting towards sustainable consumption is perfectly aligned with CSR objectives. Choosing long-lasting products eliminates the use of additional resources.

What’s more, by favouring European suppliers, the supply chain is shortened, which makes it much greener and has a positive impact on the environment.