Sachin Sharma, CEO of ProcureDesk, shows how companies lose roughly 10% of spending to weak purchasing processes. He walks through three fixes: tiered approval limits (one client saved $75K cutting unused software), monthly spend reviews (a manufacturer saved $400K renegotiating freight), and procurement software for real-time visibility. Most companies miss total cost of ownership beyond just price.
Did you know that companies waste an average of 10% of their spend due to poor purchasing processes? That's like throwing away a million dollars if you're a $10 million revenue company. And in today's economies, it's not just inefficient, it's dangerous. So stick around. In this video, I'm going to share three strategies for controlling cost in any economy. These are the exact same strategies followed by companies to reduce hundreds and thousands of dollars in their overall spending. Stick till the end. Where I will share one common mistake that Every even experienced CFOs make or experienced procurement teams make in analyzing their spend. So if you're joining me for the first time, welcome. My name is Sachin Sharma. I'm the founder and CEO of Procure Desk where we help growing companies control spend through automation of procurement and accounts payable processes. So let's jump right into it. So strategy number one is implement a pre approval process. If you do not have an approval process before employees can actually spend the money, guess what? They're going to spend the money. And here's the reality. When employees can spend money without a pre approval process or because there's no oversight, they will. And it's not their fault that just human nature when there is no accountability. So how do you go about setting a pre approval process that works for you? Simple to begin with. It could be as simple as a manager can approve up to $5,000, a director can approve up to let's say $10,000 and beyond that it needs to go to a department head or needs to go to a CFO and so on. Clients recently implemented this strategy and they simply saved like $75,000 in unwanted like off software subscriptions which nobody was using. Right. So that's strategy number one. Strategy number two is conduct regular spend reviews. So by spend review I do spend and understanding what's really going on. The reality is though, many companies don't do that. Right? So people look at their spend either when there's a problem or they are in an active budget review process and they're looking for opportunities to reduce costs. Instead, implement a monthly review process where you're looking at your spend to analyze which vendors are probably providing similar services or products where you can consolidate those vendors. Maybe you want to compare the trending against the growth. So if revenue growth is not your spend is going up and your revenue is not going up, what is really going on here? And review the contracts that are up for renewal, let's say 90 days. This is a proactive approach and this gives you leverage with vendors because you have time to react and work on your renewals and so on. A manufacturing client of our recently worked on this strategy and they save around $400,000 by proactively negotiating their contract for freight. So that's number two. Number three is deploy technology to support your processes. Now we all know you can use emails, you can use spreadsheets to track your approvals, but that doesn't scale for growing companies who are creating more than, let's say 100 purchases a month or 100 purchase orders a month. You need a automated system to have a process around it. So what I mean by that, right? So number one is your approval workflows have one place to track all the approvals. Second, it provides you support for your audit because of compliance, right? So compliance is taken care of. The third strategy is implementing technology that enforce your cost control process. Spreadsheets and emails might work in the beginning, but we all know that doesn't scale beyond a certain point, especially if you are more than 50 employees. So the right procurement technology can help you automate the procurement process, provide you real time visibility into your spend so you can more effectively do your spend analysis. And third, it supports your compliance needs because if auditor comes looking for approval controls and so on, they're all in place. So that's strategy number three. Let's talk about the bonus section now. So for the costing mistake I promised to reveal, and that is focusing just on the cost and not total cost of ownership, let's take an example. Let's say you're renewing a software contract and or you're looking for a new software and the vendor provides you with 30% discount, you probably want to go with the cheapest vendor. But when you start looking at the other costs that are involved in that, which includes the cost of training, the cost of setup, implementation cost, overall ongoing support cost, and how agile the vendor is going to be to your needs. Or are they going to charge you for enhancements? These are the things that needs to be considered in your overall analysis so you can take a decision which is more favorable for you versus long term favorable versus short term cost savings. So recap. Here are the core strategies that you can implement to control cost. First, set up a pre approval process. Second, readily review your spend. Number three, implement technology to automate your approval process. If you like this video or found this helpful, feel free to hit the subscribe button so you get notified next time when we release such videos. And till the next time see you in the next video, Sam.
