An analysis on importance of unlocking hidden savings in procurement process in private sector in Bangladesh

Abstract

Procurement cost savings are the one deliverable that all procurement professionals understand. While not defending a basic position, the realistic view is that high-quality, well-structured and sustainable cost management is a continuing core competence of procurement that needs continually to be strengthened and the procurement leadership team. Savings should be one of top objectives, while simultaneously pursuing a strong focus on value maximization and risk mitigation. Savings is procurement’s contribution to competitive advantage and coordinating the entire supply chain so as to minimise waste and duplication. The focus of this research is to identify the importance of savings in an organization, critically analyze various phases of savings in the procurement process, and critically analyze the ways of achieving savings in procurement process. To conduct the research both questionnaire survey and interview method was used. Around 50 buyers, 30 clients of the procurement team and 20 suppliers are interviewed on approximately identical questions to find out the variance of their perception. There are inefficiencies in procurement process and lack of expertise in the procurement area. Therefore current procurement practices, cost savings procedure and scope of savings opportunity have been discussed in context of private sector procurement in Bangladesh. From the findings, it has been observed that organization cannot control all the aspect of procurement process due to variance in demand, weak procurement structure, lack of knowledge, and not using technology etc. From this study two solutions have been proposed, first solution is to introducing new-fangled procurement practices in each stage of the procurement process and the second one is to introducing e-procurement in the organization.