Role of Preferred Suppliers in Procurement Planning

Organizations across all industries depend on the expertise of procurement management in seeking out and managing external supplier relationships to ensure these needed items are acquired at the best possible cost.

Without procurement, it would be impossible for most businesses to function properly and grow. Procurement planning ensures that all items and services are acquired timely so that projects and processes can proceed efficiently and successfully.

More than a business necessity, procurement can be leveraged as a competitive advantage when optimized to save money, time, and resources. But driving down costs by avoiding delays and errors and maximizing resources is just part of the reason procurement management plays an important role in a company’s bottom line.

Let’s learn in detail the role of preferred suppliers in procurement planning.

#1: Efficiency

Every organization has a unique procurement process flow. However, procurement in business usually starts with identifying a requirement and creating the purchase order that details all the requirements’ specifics. In a purchase where there is already a preferred supplier for the requirement, order execution gets quicker and easier.

#2: Better Management and Control

Having preferred suppliers in the procurement process helps in building better relationships and results in better quality services. They deliver the best value as their understanding about the business gets better due to regular communication.

#3: Cost Savings

There are some hidden costs involved in setting up final deals with new suppliers. Preferred suppliers provide the most competitive and sustainable pricing available only to regular and best customers for the bulk supplies and with better payment terms. Better pricing improves the competitiveness of the products and hence more sales and profits can be derived by the companies resulting in overall savings.

#3: Reduces delays and errors

Preferred suppliers develop a complete understanding of the businesses and project-specific compliance and obligations over time. As a result, delays and discrepancies in the supply chain decrease, and overall lead times improve resulting in better processing of supplies.

Finalizing the preferred supplier list involves much more than skimming through a series of supplier quotes. Having them play an important role in procurement planning derives quality, reliability, and overall efficiency in the supplier management process. Also, it boosts credibility and helps preferred suppliers land better projects with new buyers.

OfBusiness has made a name for itself for on-time delivery of raw materials at competitive prices. Considering its strong presence across supply chains, OfBusiness appears to be the right candidate to be added to the preferred supplier lists of most of the SMEs.