Product standardization strategy and benefits

No Central Procurement? You Can Still Consolidate Spend — Here’s How

How to lead the effort to standardize your company’s buying of specific product groups.

Procurement, Office Supplies, Category Spend, Centralized Purchasing

At companies without a central procurement organization — or no formal procurement organization — buying processes can vary, a lot. The office in Cleveland might buy commodity X from a local supplier, while the branch in Denver buys the same commodity from a national chain and the small office in Los Angeles doesn’t have a designated supplier at all.

Often, this approach isn’t practical or good for the bottom line, but businesses slide into this habit regardless. Sometimes all it takes is one person to stand up and make the commonsense argument that standardizing the purchase of some products or categories will reduce costs and time — for everyone.

“If you’re going to coordinate the standardization of a certain commodity among multiple sites, you’ve got to have a clear business reason,” says Chris Sawchuk, principal and global procurement advisory practice leader at The Hackett Group. “In many cases, the reason is simply: We’re paying different prices. Why are we doing that?”

If you’ve decided to take the next step and become a “category captain” at your organization, here’s a checklist for standardizing buying for a product or group. 

Step 1: Explain the “Why” 

Standardizing on a single supplier for a category will change your colleagues’ routines, so they may be skeptical. You’ll want to explain to your colleagues why this is a good move. Some possible reasons Sawchuk cites are: 

  • Cost: It doesn’t make sense to pay several prices for the same product, and buying as a group will probably get you a better price. 
  • Experience: Appeal to the universal desire for things to be easier and more efficient. If you can make the process less difficult and time-consuming, people will be on board. 

Step 2: Do Your Homework 

Before you can suggest a better procurement strategy, you’ll have to figure out the current buying landscape for that commodity or product:

  • First, if you’re not officially in procurement, check with the procurement department — if there is one — to ensure you’re not duplicating or contradicting any work it may be doing in this area. 
  • Find out what offices buy this commodity, what suppliers they use and the prices they pay. “Shine a light on the current situation and find out if there’s a reason why you’re doing it that way,” Sawchuk says. 
  • Bring your contacts across offices together on a call to compare notes on their suppliers. Find out what they like and don’t like about their current system and supplier.

Step 3: Decide on a Supplier 

Once you have information on the suppliers, you can analyze which would be best for centralizing spend. Some questions to consider: 

  • Can this supplier support the entire company’s needs?
  • How seamless is the purchasing process for the employees who will have to do it? 
  • Do some suppliers have fees or volume minimums that might come into play?
  • Does more than one location or office use one of the suppliers? They may not even realize they share a supplier — but if they do, this can help streamline consolidation work.

Step 4: Get Buy-In 

Ideally, most of the colleagues you worked with in Step 2 will be open to a new supplier if they understand why it benefits the business and them. Remember: 

  • Focus on ease of use, not just cost savings. Above all, people want their jobs to get easier and time is money, no matter what your role. 
  • Make sure your key contacts in other offices know the benefits of the preferred supplier and are prepared to talk about it with other people in their office or business unit. Change management is most successful with facts behind it.
  • Know that you can’t convince everyone. If a straggler or two continues doing their own thing with purchasing, that’s OK. 

“Don’t assume people are [buying individually] because they want to be different,” Sawchuk says. “Assume it’s a lack of awareness. One of your biggest tools will be creating the awareness that these situations exist.” 

Step 5: Track Progress 

Even when you’ve done your homework and convinced your colleagues, you’ve got to make sure the centralized spend is working. Here are two ways to do that:

  • Check in periodically with buyers across offices to compare notes on the process and experience. 
  • Initiate an ongoing conversation with your supplier about how to continue to identify efficiencies and savings. Now that the supplier has more of your business, it should be more open to collaboration. 

Finally, don’t be shy about promoting your internal victory. If you’ve found a way to save time, money and headaches for your business and its buyers, perhaps others could do the same. Sometimes all it takes is one person pointing out a better way.