The days of procurement being able to successfully hammer suppliers down solely on price are long gone. In many cases, vendors are operating at bare minimum profit margins so there just isn’t any additional juice to squeeze out of pricing. But that doesn’t mean there is any less of a premium on saving every last dime for purchasing departments at their respective companies. So where can procurement turn to keep satisfying this thankless part of the trade? According to Supply Chain Dive, the biggest opportunity for savings in the future lies in increased focus on transactional costs.
This approach shifts some of the onus on lowering prices inward, rather than incorporating a purely external assessment. It includes more attention to eliminating inefficiencies, encouraging greater supplier engagement in operations, and playing the long game with strategic supply chain goals. Technology becomes the number one ally as it’s leveraged to free up more time for collaboration with vendors. By reducing the costs of each transaction, purchasing departments will be able to realize the savings that are drying up more and more on the pricing side of sourcing.