Many procurement teams have implemented software systems to help fine-tune their savings practices, but if a procurement software platform is generic or one doesn’t exist, functions might be leaving money on the table.
Consider the purchase of printed materials: company brochures, signage, direct mail, annual reports, even promotional items like golf balls and tradeshow giveaways.
This is a highly specialised category of procurement, and an area Noosh has gathered data on its latest research report, The annual print procurement benchmark, which looks at how savings can be realised both in terms of immediate direct cost reductions as well as general changes to procurement practices.
While the size of projects varies greatly, the average print procurement job costs almost $15,000, yet some amount to several hundreds of thousands of dollars. Across the 178,000 projects we studied, the average duration was 30 days and the average team size was eight.
We first looked at the bidding process. Print procurement software supports a wide variety of bidding methods – such as sealed bids, reverse auction, and rate cards – so there is a need to better understand how the bidding process can affect bottom line expenses. While we did see savings when using open bidding versus other models, we found more significant savings when a greater number of suppliers were asked to bid in the first place.
Just adding one extra vendor from two to three suppliers resulted in an average overall saving of 22% in the direct costs associated with a project. This trend continued up to about six bids but, after this, we found diminishing returns. It seems the best approach to save money is to look for between three and six bids.
Looking at indirect savings we found that although change orders are common, when using a print procurement platform, just 9% of change orders result in a cost increase. The key to saving money here seems to be communicating better with suppliers through a software platform.
Workload productivity is another factor at play. We found a typical procurement professional can handle an average of 250 line items each year but, using print procurement software, this increased six-fold to an average of 1,500 line items.
Team productivity is also impacted by wait time. It can often take a while for suppliers to respond to a request for an estimate but, when using procurement software, 32% of procurement professionals said they received their first estimate within an hour, while 51% did so within three hours.
The main thing to remember when buying print is that there are always new ways to find cost reductions.
Glen Livingston is the chief revenue officer for Noosh, a provider of cloud-based print procurement and project management software.
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.