Efficient spend management will help to reduce the project life cycle time, which means reduction in the project fixed cost. This in turn adds to the organisational profit.
When we talk about the procurement sector, the current trends being observed seem to be more challenging as compared to those in past. Arun Banavali observes the same and also speaks about the significance and benefits of implementing effective spend management in companies.
Current trends in procurementSome new trends are being observed nowadays in procurement sector. They amount to huge quantity to be procured for several large mega projects of different types like dam, powerhouse, hydro tunnel, nuclear reactor building, huge bridges, road works, railway tunnel, road tunnel, breakwaters, drydock, metros, industrial buildings etc across India and neighbouring countries as well. Moreover, now there are number of projects at the remote places, bringing logistical challenges in addition to procurement. Some of these are EPC projects which means any delay in completion of project will allow no escalation from client and thus difficult for the EPC contractors to absorb.
Observations and challengesAccording to Mr Banavali, “Global procurement has been very much in practice to get best pricing for materials requirement as well while project machinery is sourced, either for construction or used as embedded equipment.  It is also observed that currently sourcing is done from Europe, East Asia, and carefully from China for the selected construction materials and machinery.”
The challenges in procurement are mainly regarding timely delivery, optimum price and the most important after sales service from suppliers and sub contractors, to meet  the demanding services from client.
e-Procurement becoming favouriteIn present situation e-Procurement is easily available and is practiced by many project based companies. In some companies, the top management has made it mandatory to go for high-value procurement.  Additionally sub-contracting is being encouraged by using the e-Procurement technology to make their procurement process transparent, faster and competent so that it could help in adding more supplier base. “Overall, e-Procurement is definitely becoming favourite choice for many industry players,” says Mr Banavali.
Benefits of efficient spend management Spend management is definitely something that needs to be taken into consideration while overall planning for organisation. More the effective and efficient spend management; more are the chances to increase the profit for any organisation. Mr Banavali believes, “Efficient spend management will help to reduce the project life cycle time, which means reduction in the project fixed cost. This in turn adds to the organisational profit.”
Add to that, Mr Banavali describes some important benefits of the same as follows:• Spend management can bring in change in organisational bottom line, as every rupee save is the one that gets added in the profit• Effective spend management can add market share for any organisation by making its products more competent• Spend management cuts down unwanted inventories and thus conserves the most important resource
– Arun Banavali, Management Consultant and VP (Retd) – Sourcing & Supply Chain, HCC