How SMEs can make better procurement decisions

Most SMEs today either use a hodge-podge of small-business tools to manage the flow of goods and materials from procurement to delivery and payment, or they outsource the management of their supply chains to third parties, which comes with its own set of limitations. 

Many SMEs have the opportunity to take that process one step further by adopting a “procure-to-pay” approach to supply-chain management that integrates procurement with accounts payable. For product companies with an eye on achieving terminal velocity, procure-to-pay tools are often the launch pad. 

There are wide-ranging benefits to adopting procure-to-pay solutions: visibility, business connectivity, enhanced demand planning and revenue forecasting. Each of those outcomes can ultimately be reduced to the most basic of supply chain functions: buying and paying for parts and materials. 

In a perfect supply chain, you only have to order the exact amount of parts or components you need. All of those parts arrive on time, in full, at the quality you need in the right geographical location. 

That, of course, rarely happens. Purchase orders change constantly, components aren’t delivered on time or have poor quality. This is a critical first-mile problem that directly affects your ability to meet customer commitments and demand. One component can mean the difference between shipping a customer’s order on time or holding onto it for weeks on end, which is why many SMEs often fall into the trap of overbuying to compensate.

In a connected supply chain, buyers are integrated directly with suppliers, allowing both to adapt and collaborate in real time on order adjustments, delivery timelines and other changes. With more visibility for those changes, SMEs can make better procurement decisions that still give them the flexibility to adapt, but not at the expense of profitability.

Source: https://www.entrepreneur.com/article/385203