📊 Every business should benchmark every cost it incurs…

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On paper, that sounds simple. A strong procurement team, equipped with the right tools and expertise, keeps all costs under control, reviews suppliers, and ensures the business is always getting the best deal.

But, in reality?

Most organisations don’t have that luxury. Instead, spend is spread across multiple budget holders — often department heads or managers whose expertise is in operations, production, or people, not in commercial negotiations.

And that’s where the challenges creep in:

  • Purchases are made based on convenience rather than value
  • Suppliers are renewed year after year without proper review
  • Deals are agreed without benchmarking against the wider market
  • There’s limited visibility of total spend across the business

The consequence? Costs quietly inflate, inefficiencies compound, and opportunities to add real value slip by unnoticed.

👉 The truth is, procurement isn’t just about buying. It’s about making sure the business consistently has the right solution, at the right price, on the right terms.

When businesses commit to benchmarking every cost — whether it’s raw materials or indirect categories like mobile phones, lab testing, or logistics — they gain:

✔️ Clear visibility of where money is going
✔️ Confidence that spend is delivering maximum value
✔️ Stronger supplier relationships built on transparency
✔️ Savings that drop directly to the bottom line

In today’s environment, where margins are under pressure, not benchmarking your costs is the same as leaving money on the table.

Every cost matters. The question is: are you confident you know if yours are optimised?

 

 

 

 

 

Top Tips for an Effective Invitation to Tender

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🗨️ How can you reduce costs when everyone’s a buyer ⁉

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▶️ How many procurement experts do you have in your business?

🥼The technical manager buying lab services

🦺The health & safety manager buying protective clothing & equipment

🛠The engineering manager responsible for the management of £5m of engineering spend

👨‍💼 The HR administrator buying office supplies…..

Unfortunately, in our experience, many businesses rely on budget holders to negotiate (or not!) critical deals, sign contractual agreements (if there are any!) and monitor the spend (?).

How can you reduce costs in your business when this is the buying practise?  A fragmented practise which creates inefficiencies, duplication (in terms of products, suppliers, resource!) and ultimately increased costs.  This, all before we get into the impact on carbon footprint with increased deliveries/sustainable practises discussion.

The ideal situation is to use your true procurement experts for all types of spend, not just spend relating to raw materials and packaging.  Afterall, the principles relating to these types of spend, should be applied to ALL types of spend.

UK-based food manufacturer receives a recipe for cost savings of 16%

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Background

Our client is a manufacturer of frozen foods, with 3 sites, based in the UK.  Across all sites, there is a common need for a large amount of non-stocked consumables – items like PPE, uniforms, janitorial and paper products.

With several buyers across the three sites, the company was concerned that a lack of budgetary control was leading to fluctuating/inflated prices – and that there was a not enough visibility around supplier on-time/in-full delivery performance and quality. They also felt there was a significant number of possibly duplicate or marginally different specifications for the portfolio of circa 350 products and that PO errors and the number of deliveries were excessive.  The client also wanted to drive cost reductions.

Approach

The team at Pare analysed the purchase data to identify inefficiencies, reducing the range of standardised product specifications from around 350 to just 131.  This product range, along with a defined set of stringent service requirements was then sent out to tender.

Outcome

As a result of the tender exercise, the supply base has been reduced from seven to just two (reducing deliveries), with both successful suppliers agreeing fixed price contracts which deliver a significant 16% cost reduction.

The introduction of service KPIs provides clear visibility of supplier delivery performance which has led to much more consistent supply and quality.

A formalised price increase review process has been implemented which has not only eliminated PO errors, but also given the business better control and greater ability to forecast and budget for the future.

The Importance of Stakeholder Engagement

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We work with a number of different food manufacturers, delivering tenders and procurement projects where procurement teams are under-resourced.

With no exceptions, stakeholder engagement is key to the successful delivery of a tender or procurement project.  It doesn’t matter how good your invitation to tender, your supplier research and quality of data is, getting buy-in, or being able to influence others who are directly affected by the outcome of the project is often the difference between success and failure.

It is imperative to invest the time at the outset to listen to colleagues and stakeholders, not only to understand their challenges and opportunities but to also tap into their wealth of experience.

Procurement Policy Basics

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Do you have a procurement policy outlining your procurement process, spend thresholds and rules? Do teams adhere to it? Do they even know it exists?

A procurement policy is an important pre-requisite for controlling spend. It should be accessible to all staff who have the authority to purchase goods and services in an easily readable format.

Procurement Policy Basics

A procurement policy is a set of guidelines used to establish and standardise the procedure for purchasing goods and services in a business and should cover the following:

  • Policy objective. What are the goals of the policy? For example, is it to provide a consistent process for use by all departments? Is it to ensure that all procurement activity is aligned with company goals and values?
  • Process overview. The policy should include a high level summary of the procurement process detailing the steps involved (a flow chart is often useful here).
  • Procurement thresholds. Spend limits for staff and the criteria for the type of procurement activity required, e.g. number of quotes, tender, etc.
  • Tender process. The policy should include an outline of the formal tender process for purchases that meet the established criteria.
  • Sustainability and diversity statement. Include a brief overview of goals and initiatives.
  • Ethics and anti-bribery (as above).

Pare can support with the development and delivery of a procurement policy to ensure a consistent buying approach across the business.

An example of outsourced procurement in practise

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A valuable client of ours is a UK based food manufacturer who have a strong procurement team overseeing the purchase of raw materials and packaging.  The management of in-direct procurement is outsourced to Pare.

One recent project we completed saved them £48k per annum on their PPE and janitorial spend (a saving of 18%).  That’s £48k to their bottom line!  As part of the process, the supply base was reduced from 8 to 2 and the product range was completely streamlined and standardised, thus making the ongoing buying process easier to manage.

What are the other benefits of outsourcing?

  • No costly recruitment fees
  • No ongoing costs of employment
  • No direct employment headaches
  • Additional/short term resource to solve immediate problems
  • Flexible contracts
  • Focus – complete dedication to projects requiring a quick turn around
  • Expertise
  • Specialists, not generalists
  • Removed from internal politics
  • Fresh perspective
  • No learned “bad behaviour” from within the organisation

The list is endless!

What % of your spend is “unmanaged”?

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What % of your business’ overall spend is not “managed” in the same way as the spend which falls under the control of your procurement team?

There are opportunities to make savings and reduce risk when the same procurement principles are applied to tail spend, not to mention the raft of other benefits (improved credit terms and cashflow, measurable supplier performance KPIs in place, fixed pricing, budget control, simplified procurement processes, etc)

In many instances, tail spend is overlooked mainly due to lack of resource but also due to the accessibility of  the purchase data available for these types of categories.

This is where you would benefit from having an outsourced procurement partner; a dedicated resource to get into the granular detail of this spend and ensure that these often overlooked categories are managed in exactly the same way as your internal procurement team would.

Is it time to change your supplier strategy?

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When was the last time you carried out an in-depth review of your suppliers?

We are all aware of the supply chain challenges that businesses are faced with.  In light of these, is your business looking to resurrect a more local supply chain to re-direct risk across a broader supply base?

Historically, sourcing activities were far-reaching, in many cases due to lower production costs overseas.  However, recent events have caused businesses no end of disruption due to the inability to get hold of materials, thus wiping out any costs savings from sourcing abroad.

 

Procurement Resource

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All procurement projects need to be data driven, however, this often requires additional resource in your procurement team or otherwise.  It is necessary to get into the granular detail in order to identify the best purchasing opportunities and deliver consistent, successful results.  This often requires the detail included in invoices and unless you have an advanced system to recognise, read, collate and report this detail, then its just down to hard graft!