Cost cuts essential to maintain profitability
  Supreme Infrastructure is doing centralised procurement of major materials for streamlined operations. Their procurement planning is lined up with project or business planning to identify exact requirement on day to day and week to week basis. It will optimise supplier portfolio and combine purchases of petroleum products (like bitumen, furnace oil etc), steel and related steel products and cement at group level. It will merge logistics activities of companies and reduce cost.

Supreme Infrastructure is partnering with key suppliers to enact joint planning programs that find a common ground by making contract via MoU for booking quantities requirements at group level and fixing discount for a year to get continuous supplies with very economical price. Cost cuts have become increasingly important to maintain profitability in a low margin projects in competition environment.

Pankaj Udeshi, Asst. General Manager Procurement, Supreme Infrastructure India Ltd  says, “Presently we are trying to complete more project work to take advantages of lower price of many basic raw materials like petroleum products (i.e Furnace Oil, Bitumenetc) and also same as with steel and related steel products. We have kept our eyes on changes that will expect in future in regards to price, taxation and new policies on many basic products due to government regulations and global market conditions.

He added, “We are using SAP for our accounting and e-procurement for services and product like insurance, tiles, computers, transportation, power project material (like HT and LT cables, transformer, RMU etc) computers etc. e-procurement is turning out to be the magic mantra to save costs and drive profitability.”

Buying factors
Udeshi outlines some points to be considered before making decision of buying construction equipment:
• Analyse the need of construction equipment, and take exact specifications of equipment and project at which it is to be used, some government project grant excise or customs benefits (tax incentives) if equipment will be uses for the same project, it may save lots of money.
• Check availability of fund or procure on loan.
• Future use of equipment or any project is in pipe line or depreciation on the machines and also check resale value.
• Parts availabilities from local area or to be imported from another state or from abroad.
• Transportation cost of machines from the suppliers manufacturing unit to our required destination is also important.
• Storage space of machinery, to keep it in good conditions.
• Check if operators are readily available or training is required.
• Buying or renting, whichever is cost-effective.

e-Procurement useful in services and products supplied by private manufacturers
As far as infrastructure is concerned, generally three to four major materials requires in large ratio like steel, cement, bitumen and other related refinery products. These product generally supplied by government units like SAIL, RINL, HPCL IOCL, BPCL etc. and cement companies like Ultratech Cement Ltd, ACC, Ambuja are major players in market. All these manufacturers generally maintain same rates of products in the market and less bargaining is possible, so the only option is to choose supplier.

Udeshi believes, “e-Procurement is mostly useful in services and products supplied by private manufacturers. We can use for insurance purpose, vitrified tiles procurement, transportation work, and power project material (like HT and LT cables, transformer etc.) computers etc.”

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Procurement of building materials requires good product and brands knowledge available in the market with their strength and price

Pankaj Udeshi, Asst. General Manager Procurement, Supreme Infrastructure India Ltd