Opportunities for Improving Value for Money through Exploiting Supply Markets

Opportunities for Improving   Value   for   Money   through Exploiting Supply Markets.

Value for money implies paying for a good or service as justified by its quality or availability, and considering an organization’s economy, efficiency and effectiveness.

A supply market can achieve value for money in many ways, namely:

1. Obtaining or increasing quality of service with no additional costs to the organization.
2. Avoiding purchases that are unnecessary.
3. Meeting the needs of users but not exceeding them.
4. Specifying the relevant purchasing requirements that suppliers in the market can be able to recommend cost-effective and innovative solutions for.
5. Improving negotiations skills to ensure the organization gets a good deal from suppliers.
6. Optimising the cost of delivering goods or services over the contract life-cycle rather than minimising the initial price.
7. Introducing contract incentives to ensure continuous cost and quality improvements during the contract duration.
8. Combining transactions in order to obtain economies of scale such as volume discounts.
9. Centralising purchasing in order to obtain the best prices and better discounts from bulk buying.
10. Developing a collaborative working relationship with key suppliers in order to get maximum value by identifying opportunities to reduce costs and adopt innovative approaches.
11. Streamlining procurement and finance processes in order to reduce the cost of buying goods or services.
12. Minimising the level of stocks held and the lead-time to reduce stock holding costs.

Supply markets that offer value for money to both buyers and suppliers may give rise to the following opportunities;

1. Provide supply market information that is useful in exploring opportunities that help in identifying competitive local suppliers.
2. Provide valuable information to buyers about suppliers’ strengths and weaknesses to aid in negotiations that may improve value for money.
3. Identify alternative or substitute goods and services that will offer better value for money.
4. Identify opportunities for buyers and suppliers that improve activities in the supply chain to reduce costs and improve sustainability.
5. Identify ways of suppliers introducing technologically innovative solutions in the supply market.
6. Identify strategies to plan and schedule procurement in a way that benefits both suppliers and buyers.
7. Attract all suitable suppliers to respond to the invitation of offer from the buyers due to assurance of value for money for all parties.
8. Identify ways to facilitate supplier or market development activities to encourage competition for the buyer’s requirements.