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How Exporta Can Lower Your Business' Procurement Costs?

How Exporta Can Lower Your Business' Procurement Costs

Companies are always looking for ways to reduce costs. Whether on the input & procurement side or the sales & marketing side. On the former, common practice is to look at procurement categories with large amounts of spend and start searching for ways to reduce that spending. One of the more routine approaches is to run an RFP, inviting incumbent suppliers along with potential new partners to help drive competition for your business, with the end-goal to of ultimately reducing cost.1

But what if your cost base has already bottomed out? What if you are buying a good or service that is difficult to come by, thereby putting the power in the suppliers’ hands? How are you able to reduce your spending in a category where all the signs are pointing to a cost increase?

In order to answer these questions, we at Exporta Wholesale, have provided a guide that we hope will address most of your business concerns.

 

Identifying the Cost Drivers

In order to implement procurement measures, it's important to understand the underlying cost drivers. The following method may be appropriate for analyzing cost drivers, where the total cost is a function of: (1) the activities we do, (2) the productivity we execute the activities with, as well as (3) the unit costs of the goods and services included in these activities.2



Total Cost is a Function of:

Activity

Productivity

Unit Cost

Main Questions

Is the activity necessary?

Is it optimized?

Is the price right?

Common Symptoms

Unnecessary or low value creation activities

Productivity challenges, related to equipment, people and processes

Increasing costs for purchased goods and services

Example of Levers / Measures

  • Reduce consumption
  • Prioritize activities with higher returns
  • Instill feedback loops
  • Optimize specifications
  • Redefine the supply chain
  • Simplify and standardize processes
  • Automation
  • Negotiation
  • Bundling
  • Insourcing / outsourcing
  • Strategic partnerships



Note that the measures, or levers, can affect several cost drivers simultaneously, due to linkages and interrelationships. For example, a tender process can result in lower unit prices, as well as product standardization based on input from suppliers during the process.

 

The following 8 methods are ways in which Exporta Wholesale can help you in utilizing these levers to improve the bottom line of your business:3

 

1. Negotiation

Exporta helps businesses negotiate better terms with Latin American suppliers, focusing on quality and price. Exporta is able to do this by considering contract extensions to achieve lower prices. To identify which suppliers, or contracts, you should target for a renegotiation, Exporta provides relevant insights, such as spend development, your importance as a customer, or contract expirations. We also assist in the analysis of spend across departments, business units, or categories to identify bundling opportunities.

 

2. Tender Process

Exporta’s value proposition comes through its proprietary, matching algorithm that sets buyers up with the right types of suppliers. This process unfolds through the RFQ process, which we’ve detailed in a prior post. We invite suppliers on our platform to submit a bid to supply products or services. The product specifications are required for each RFQ so that supplier quotes are tailored to your needs. We’re constantly introducing new suppliers to increase the competitiveness of bids on our platform.

 

3. Bundling 

A big area where Exporta thrives is our flexibility-enabling infrastructure for growing businesses. Whether you’re just starting out with low order quantities, or you want to achieve scale and move to new markets, Exporta allows businesses to reduce costs by ordering larger volumes, with varying levels of delivery terms and contract lengths.

 

4. Optimize Specifications 

Exporta Wholesale helps buyers standardize the specifications of products and services, which translate into compliance with industry standards. The raw materials and components found on our platform provide a lower cost and higher quality alternative to East Asian-based manufacturing. We also solicit the opinions and expertise of our supplier network to understand key bottlenecks in the supply chain process.

 

5. Reduce Consumption

Assessing whether all business purchases are necessary takes discipline and patience. At Exporta, we understand what it takes to build a consumer-loving brand. By offering a holistic approach to supplier relationship management, we can help your business establish guidelines and follow-up protocols to minimize over-consumption. This attention to cost detail entails removing unnecessary intermediaries in the value chain that do not create value, assessing e-commerce solutions to streamline processes, and optimizing inventory management.

 

6. Insourcing / Outsourcing (Make-or-Buy Decisions)

Exporta will help assist your business in the make-or-buy decision. This process involves analyzing the cost of insourcing compared to external spending and analyzing the cost of outsourcing compared to building it internally.

 

7. Strategic Partnerships

Buyers should consider integrating strategic partners in the value chain with important suppliers to improve efficiency. Given our network of over 5,000 Latin American suppliers, we provide the foundation for collaborative projects with key suppliers to be built, in addition to building opportunities to bundle volume with other players. 

 

Conclusion

Selecting and implementing procurement measures is a vital part of a holistic approach to strategic procurement. Working continuously, systematically and fact-based with your procurement costs is crucial to realize savings and improving profitability.

 

Exporta Wholesale helps Amazon sellers, brand builders, and growing small businesses confidently navigate the product sourcing process. Click here to learn more about how Exporta works and how to submit an RFQ.

 

About Exporta Technologies

Exporta Wholesale is the largest marketplace connecting suppliers in Latin America with buyers in North America. Today, we have a network of over 5,000 Latin American suppliers serving a variety of consumer goods and product categories in the United States. 

 

Exporta’s marketplace offers buyers a full-service experience in the origination, sourcing, and managing of products. The platform was founded on the idea that curation and service are the most important elements in the buyer’s journey. Exporta’s marketplace is building technology that addresses the pains of sourcing products internationally at attractive prices.


References

  1. https://www.procurious.com/procurement-news/reduce-costs-using-srm
  2. https://www.igniteprocurement.com/blog/8-procurement-levers-to-reduce-procurement-costs
  3. https://www.igniteprocurement.com/blog/8-procurement-levers-to-reduce-procurement-costs

 

 

 

 


 

 

 

 

 

 

 

 

 

 

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