June 22, 2020
Cost cutting is a business reality in uncertain times. With buyers hesitant to spend, many companies have reacted by reducing expenditures, particularly when it comes to procurement. From shortages of essential supplies to unpredictable fulfilment and delivery, the strain on the just-in-time supply-chain model makes procurement a vulnerable part of operations.
However, simply slashing spending while continuing to juggle multiple suppliers may do more harm than good in the long run. Organizations can be better served by rethinking supplier strategy and staying the course on digital transformation. Ultimately, it’s this shift that will drive sustained cost optimization and streamline purchasing.
Here are several strategies that help our customers—and can help you—reduce costs today and accelerate future growth.
1. Strategic sourcing = supplier optimization
Operational disruptions and shortages have organizational buyers looking for new suppliers—whether it’s healthcare organizations or school districts enabling distance. By considering a strategic B2B supplier model, organizations can reduce the variables and risks associated with sourcing. Amazon Business does this by bringing together hundreds of thousands of sellers in one digital store. We verify sellers and credentials, and ensure deep selection across all business categories—so that our customers don’t have to.
“Amazon Business helps us proliferate Intel technology through a very familiar shopping experience. The impact of Amazon Business is that it’s changing procurement as an activity. Customers have access to hundreds of thousands of suppliers, which makes procurement more efficient, and dynamic pricing and discounts drive real value for businesses.” Phil Vokins, Cloud Services Director - Intel Canada
2. Digital transformation is still king
A significant portion of procurement costs are still structural, including processes, systems, and infrastructure required to buy, triage, process payments, and to get goods delivered to the right groups. Digital transformation will continue to eliminate overhead and reduce the total cost of purchasing. And machine learning is playing a vital role in that process, powering recommendations and search so buyers can find what they need quickly. You can also gain efficiency by automating common tasks such as approval workflows, reorder lists, and scheduled deliveries. For larger organizations, punchout integration with e-procurement systems has cut out steps in the buying workflow. All of these tasks add up, reducing costs and freeing up employees’ time to focus on high-value work.
“At our scale, every percentage point counts. When you save thousands of dollars on each transaction — considering the sheer size of our procurement organization and our purchasing activities — it adds up fast. That’s why we’re aggressively rolling out e-commerce solutions – such as Amazon Business – in North America, Europe, and beyond, because of this buying channel’s superior value proposition.” Nassim Kefi, Procurement Advisor – ExxonMobil
3. Unpacking the black box of spend data
We’ve also learned that our customers want more insight into their organization’s spending so they can recognize opportunities to reduce costs. Moving spend to a single, online store allows you to see the complete picture for supplier analysis, cost analysis, and product selection. You also get better insights into buying behavior using advanced analytics and dashboards. You can see who’s buying what and for how much. Monitoring buying behavior and discovering patterns help you make better decisions and establish policies to guide employee spending.
“With Amazon Business, we can focus on what the data means rather than on whether it is accurate. We used to review purchasing data every two or three months. Now we can look at it in real time, which makes us much more agile in our decision making.” Mark Arrigotti, Head of Global Procure2Pay – Uber
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