#This is Procurement // Private Equity & Procurement
How Procurement helps achieving an efficient IRR (Internal Rate of Return)?
When restructuring a company several measures are to be taken in order to optimize operations, HR, marketing and mainly to assure financial stability. To be successful companies need a consistent long-term plan and a strong team effort.
Together with financials, operations are a major part of a restructuring plan. In which Procurement is included. Analysis of spend, existing contracts, supplier´s database, due payments among other sub-processes are the focus of equity & procurement team. Target? To generate cash flow, avoid more losses and make company profitable once again.
5 Questions Action Plan:
# Impact operating & capital expenditure?
# Cost of goods/services sold?
# Released savings invested in new product/service development?
# Net debt decrease via released savings?
# e-Tools used to support spend&savings management?
After gathering all the information, it is time to implement measures.Negotiation with banks and suppliers. Cost avoidance and cost reduction. Strict monitoring of spend by product, by service, by supplier, by category, by department. Previous approval of each spend and post approval of each saving. Tracking, reporting and approval workflows through e-procurement tools.
It´s not easy but it´s doable. If you manage to increase companies´ economic profitability it means that there´s enough free cash flow to pay debt and pay shareholders.
Equity & Procurement partners for a new beginning.www.quay.com.pt