Abu Dhabi Gives Small Businesses a Procurement Power-Up!
Abu Dhabi Gives Small Businesses a Procurement Power-Up!
Small and medium enterprises form a significant part of the UAE’s business landscape, and they are critical to the Emirates’ ambition to become the world’s top nation for entrepreneurship.
The UAE is home to about 350,000 SMEs, representing over 94% of all active companies in the country. These enterprises employ 86% of the private sector labour force and contribute over 60% of the total GDP(1). In Abu Dhabi alone, SMEs account for more than 90% of businesses, employ 39% of the workforce and contribute 32% of non-oil GDP
Abu Dhabi SME Champion Programme – Game-Changer
The Abu Dhabi Department of Economic Development (ADDED) recently unveiled the Abu Dhabi SME Champion programme, an initiative to empower SMEs in the region. The programme seeks to assist SMEs in securing procurement opportunities from major private and public sector firms, thus supporting their growth and expanding their capabilities.
Four of Abu Dhabi’s leading companies – Etihad Aviation Group, Aldar Properties, Emirates Steel Arkan Group, and Ittihad Papermill – have already committed to procurement opportunities worth AED 30 million in the programme’s first phase. These companies will also nominate specialized teams to coordinate and work with selected SMEs on training and workshops, equipping them with the necessary skills to compete professionally in procurement.
The Abu Dhabi SME Champion programme is designed to ensure that SMEs in the region are equipped with the necessary skills and resources to compete effectively in procurement and scale up their businesses. The programme’s future cohorts will see the participation of more large companies and government-related entities, indicating a growing trend of support for SMEs in Abu Dhabi.
The programme underscores the government’s commitment to promoting economic growth and championing SMEs as drivers of a vibrant, private sector-driven economy. According to His Excellency Sameh Al Qubaisi, Director General of Economic Affairs at ADDED, Abu Dhabi is focused on developing a knowledge-based, innovation-driven economy, with SMEs and start-ups playing a pivotal role in this vision.
Building a Unicorn Nation
In October 2022, the Ministry of Economy launched the second phase of The Entrepreneurial Nation, an initiative designed to catalyse the growth of 8,000 SMEs based in the UAE, foster foreign direct investment, and establish the UAE as home to 20 unicorns by 2030(3).
The initiative has already generated impressive results, with over 40 successful public-private partnerships and programs established, attracting more than 800 SMEs and over 5,000 individuals to participate. Since its inception, The Entrepreneurial Nation has created significant value, with AED 19.5 million delivered to date.
UAE’s SMEs Set to Take on the World
The UAE’s pro-SME policies and programs are geared towards cultivating a culture of innovation and entrepreneurship, enabling SMEs to play a critical role in the UAE’s economic development. Through these initiatives, the UAE is positioning itself as a leader in the global entrepreneurial landscape.
As a leading procurement solutions provider, Moglix recognises the significance of procurement opportunities for SMEs in the UAE and committed to delivering value at scale. Contact us today to learn more about how we can support your business and help you take advantage of the opportunities provided by the UAE.
UAE’s New Corporate Tax: What You Need To Do To Prepare
UAE’s New Corporate Tax: What You Need To Do To Prepare
The UAE has long been known for its business-friendly policies and tax-free environment. However, the UAE has been looking to diversify its revenue streams with the global economic landscape constantly evolving. In January 2023, the UAE announced the introduction of a new federal corporate tax law to promote economic growth and broaden its revenue base.
This new tax law marks a significant departure from the previous tax-free environment, as it imposes a 9% corporate tax rate on companies operating in the UAE, with some exemptions and deductions available. UAE businesses must stay informed about the new corporate tax regulations to ensure compliance and avoid potential penal consequences.
The Taxman Cometh: What UAE’s Corporate Tax Means for Taxable Entities
The new corporate tax will come into effect on 1 June 2023 and apply to financial years commencing on or after that date. The corporate tax rate is set at 9% and will only apply to taxable income exceeding AED 375,000. Any income below this threshold will not be subject to tax.
Under the new law, resident companies will be taxed on their worldwide income, meaning any income derived from inside and outside the UAE. To be considered a tax resident of the UAE, a legal entity must meet specific criteria, including being established under UAE law, being effectively managed and controlled in the UAE even if established under foreign law or being determined as a tax resident by the tax authorities.
Meanwhile, non-resident companies will be subject to corporate tax under specific circumstances, such as having a permanent establishment in the UAE, deriving UAE-sourced income, or having a nexus in the UAE as determined by the tax authorities.
Free zone entities will also be subject to tax on non-qualifying income. The tax authorities will define qualifying income in due course.
Tax Breaks for the Lucky Few: Who’s Exempt from Corporate Tax in the UAE?
Certain entities will be exempt from the corporate tax. These exempt entities include government entities and government-controlled entities, as well as those engaged in extractive or non-extractive natural resource businesses. The exemption will ensure the growth of the UAE’s financial services and the oil and gas sector.
Qualifying public benefit entities, investment funds, and public or private pension or social security funds that meet certain conditions are also eligible for exemption.
Keeping Records: Your Key to Tax Compliance
Taxable entities will be required to maintain accurate records and documents for 7 years after the end of the relevant tax year. These records will be essential to back up the information provided in tax returns or any other documents filed with the tax authorities and will help the tax authorities determine the taxable income.
But it’s not just taxable persons who need to keep records. Even if you’re exempt from tax, you still need to maintain records that will allow the tax authorities to verify your exempt status. These records should also be kept for 7 years after the end of the relevant tax year.
Tick Tock Taxpayers: Deadlines for Tax Returns and Payments
Taxpayers must file a tax return within 9 months from the end of the tax year. They must also make corporate tax payments within 9 months from the end of the tax year. The good news is that taxpayers are not required to make advance corporate tax payments.
Although registration for e-filing of tax returns under the new federal corporate tax regime is yet to be notified by the FTA, the tax returns can be electronically filed on the EmaraTax portal of the tax administration once it is announced.
From Compliance to Optimization: Enhance Your UAE Business Operations
As UAE sets its sights on diversifying its economy, the recent announcement of a federal corporate tax law signals a new chapter for businesses operating there. Moglix supports businesses in the UAE, offering solutions to streamline procurement processes. Contact us to learn more.
The UAE’s Vertical Farming Renaissance: A New Era in Food Production
The UAE’s Vertical Farming Renaissance: A New Era in Food Production
As a country that faces the challenge of arid weather conditions, the United Arab Emirates (UAE) has always been a pioneer in innovation and technology to overcome challenges related to agriculture. Vertical farming is one such innovative solution that stands out.
With the global vertical farming market projected to reach USD 9.7 billion by 2026 and grow at 25%, the UAE is rapidly positioning itself as a global leader in the industry. Many startups and companies in the UAE have already made significant investments in this promising industry, and it’s only a matter of time before we witness a vertical farming revolution in the region.
Sowing the Seeds of Change: Reinventing Agriculture Through Vertical Farming
The world’s population is on an accelerated rise, and with it comes the pressing issue of food security. Climate change, water scarcity, and urbanization are just some factors that will affect the availability and accessibility of food.
Vertical farming is a promising solution that has the potential to revolutionize the agriculture industry. This innovative technique involves growing crops in vertically stacked layers, allowing for high-density cultivation and maximum use of available space. Unlike traditional farming methods, vertical farming requires no soil and uses hydroponic and aeroponic techniques that rely on nutrient-rich water or air for agriculture. It also uses minimal water and no pesticides, making it an eco-friendly and sustainable solution for food production.
Furthermore, agritech startups are leveraging precision agriculture to optimize the benefits of vertical farming. Precision agriculture tailors farming practices to specific crops and regions using data and analytics, providing a smart-agriculture approach that transforms traditional agriculture practices.
As the UAE continues to invest in innovative technologies and sustainable solutions, vertical farming is helping the country meet its food security goals and become a leader in sustainable agriculture practices.
Sky’s the Limit: How UAE’s Vertical Farms Will Feed the Future
The UAE is determined to lead the global food security movement by 2051 with the implementation of its National Food Strategy. This ambitious initiative aims to enhance local food production while promoting sustainable agricultural practices using modern technologies.
Vertical farming is one such technology that is helping the country achieve its food security goals. The UAE is making great strides in vertical farming by scaling up food production through multiple indoor farms. A testament to this progress is the world’s largest R&D indoor vertical farm, which was recently opened in the UAE by US-based AeroFarms in February 2023. This facility, which the Abu Dhabi Investment Office supports, further cements the UAE’s commitment to next-generation agriculture in arid and desert environments.
The UAE’s commitment to food security and its support for innovative technologies has made it an attractive destination for agritech investors. Its robust infrastructure and government initiatives have helped several agritech start-ups, such as Pure Harvest Farms, successfully raise funds, making it the highest-funded agritech start-up in the MENA region.
With government support and innovative application of technology, the UAE is poised to become a leading player in sustainable food production and agritech investment.
Join the Agritech Gold Rush: Opportunities in UAE’s Vertical Farming Industry
With the region’s harsh desert climate, the need for innovative and sustainable food production methods is more pressing than ever. This presents an exciting opportunity for agritech investors to get involved in sustainable food production and contribute to the growth and development of the industry. At Moglix, we recognize the potential for growth and innovation in this field and are committed to supporting sustainable food production in the region. Contact us to learn how we are helping organizations digitally transform their procurement and supply chain by creating seamless B2B procurement ecosystem.
Celebrating a year of India-UAE CEPA: Impacts and Opportunities
Celebrating a year of India-UAE CEPA: Impacts and Opportunities
The celebration of one year since the signing of the India-UAE Comprehensive Economic Partnership Agreement (CEPA) has begun, marked by the establishment of the UAE Chapter of the India Business Council (UIBC-UC), which corresponds to the existing UIBC-India Chapter. The purpose of this initiative is to strengthen trade and investment between India and the UAE, promoting economic ties and fostering prosperity. Now, it is essential to examine the significance of the India-UAE economic partnership and the advantages of the CEPA agreement that have been realized thus far, as we reflect on the past year.
Agreement – India-UAE Economic Partnership
The landmark CEPA agreement—the first-ever bilateral trade deal for the UAE and India’s first FTA foray in the MENA region—was signed on February 18, 2022, to propel economic progress, market openness, regional integration, and strategic cooperation. It aimed to transform India-UAE trade relations by reducing and removing tariffs on over 80% of the product lines (90% in value terms) and augmenting services trade to $15 billion by enhancing market access. The CEPA pact also targeted investment facilitation, targeting $75 billion worth of investments from the UAE, by directing funds to India’s priority sectors and enabling collaboration with SMEs.
However, the biggest CEPA agreement’s opportunity lies in its ability to secure supply chains, thus putting this relationship on track to achieving $100 billion in non-oil annual trade by 2027.
Impact – CEPA
In the eight months since the agreement came into effect on May 1st, 2022, the India-UAE economic partnership has undergone a colossal transformation. Some of the major CEPA agreement benefits are:
- The bilateral trade value rose 27.5% YOY to reach $57.8 billion in the first eight months of operation in 2022, growing $12.5 billion from last year .
- In less than a year, non-oil trade between the UAE and India has grown 10 per cent – a surge of $50 billion.
- Sectors like agriculture, automobiles, electrical machinery, and gems and jewelry reported 39%, 35%, 28%, and 18% value-based export growth, respectively.
Opportunities – India UAE Investment
- Over 11,000 Indian companies got themselves registered in Dubai in the past year alone, and now their total is in excess of 83,000, signaling a strengthening of bilateral economic linkages.
- A Dubai Incubation Center for encouraging innovation in logistics was set up by DP World in collaboration with Invest India under the ambit of the CEPA agreement.
- The Ducab Group launched a Bengaluru-based regional office to provide its metal and cable products to the Indian construction and energy sectors.
- The CEPA agreement’s impact can also be seen in the sustainability space, with the setting up of a 300 MW renewable energy project in Gujarat and ecological food parks across India.
Prospects – India UAE FTA
That’s not all. With initiatives like virtual trade corridors and the establishment of the Abu Dhabi Investment Authority’s offices in GIFT City on the anvil, the India-UAE collaboration is expected to scale higher. UAE’s private sector also plans to invest $2.5 billion in logistics, renewable energy, food processing, and retail projects in Uttar Pradesh.
Last year has been phenomenal, the CEPA agreement has resulted in a fusion of the financial, technological, and human capital of both nations, thereby serving as a fertile ground for economic prosperity and innovative cross-border collaboration. India-UAE CEPA has the potential to become a model for other countries seeking to strengthen economic ties with the UAE. The CEPA agreement has already demonstrated its success in boosting trade and investments between India and the UAE. It has provided a framework for enhanced economic cooperation, including in sectors such as services, investment, and intellectual property. Moreover, the establishment of the India Business Council-UAE Chapter has facilitated further collaboration and networking between the two countries. These developments signify the effectiveness of the India-UAE CEPA as a potential model for other countries looking to deepen economic ties with the UAE.
UAE’s FTZ (Free Trade Zones): A crucial piece in the region’s booming business
UAE’s FTZ (Free Trade Zones): A crucial piece in the region’s booming business
The UAE has steadily established itself as a supply chain nerve center in the 21st century. A significant driving factor behind this can be traced back to the UAE’s free trade zones (FTZs). With 45 free zones in Dubai, Abu Dhabi, Sharjah, Ajman, Fujairah, Ras al-Khaimah and Umm al-Quwain, the region has redefined economic movement and procurement across borders.
Let’s take a deep dive into what these FTZs are and why they matter.
UAE’s free trade zones: The revolution driving the region’s business boom
Free trade zones (FTZs) are designated areas within a country where goods can be imported, manufactured, and exported without being subject to certain taxes and tariffs. They promote economic development and boost foreign investment by providing tax and regulatory incentives to businesses operating in these zones.
FTZs have been pivotal in boosting business in the UAE region. They have diversified economic activity, facilitated more efficient imports and exports, and put the UAE on the map as a preferred investment destination.
Businesses in FTZs enjoy various benefits like zero duties on imports and exports and significant tax breaks w.r.t income tax and corporate tax. Some free zones also have extremely low minimum share capital requirements, support foreign ownership and may not even require a physical office presence in the UAE.
Thanks to such incentives, the future of FTZs holds great promise. The Dubai Free Zones Council chairman — Sheikh Ahmed bin Saeed — expects that the FTZs in Dubai alone could contribute over $68 billion to the emirates’ GDP by 2030.
How do FTZs boost the procurement and supply chain in the UAE?
Establishing a business in an FTZ or integrating such free zones in your supply chain could give you a strategic advantage. Firstly, the massive tax breaks in the UAE’s free trade zones could reduce procurement costs. Additionally, passing on the cost benefits to your customers could offer cumulative cost advantages over time, giving you a competitive edge over your peers.
Operating in an FTZ also comes with stringent reporting regulations. Again, this may seem like a liability, but it directly translates to increased visibility across the supply chain, a valuable procurement advantage.
Decoding key laws that have impacted business in the UAE
Decoding key laws that have impacted business in the UAE
A study of international supply and trade over the past few years reveals a fascinating insight — the UAE has emerged as one of the largest supply chain nerve centers on a global scale. In its recent study titled ‘Destination Digitalisation: The Future of Logistics, ADQ uncovered predictions that the UAE’s logistics market is poised to grow phenomenally by 2026 — at 8.41% annually to reach the $31.4 billion mark.
Much of the region’s logistics success story can be traced back to the UAE’s favorable procurement supply chain regulations. Here is a preview of some such legal provisions.
UAE’s free zone law
Free zones in the UAE are designated areas where foreign investors can establish and operate a business without needing a local sponsor. Operating in a free zone comes with benefits like 100% foreign ownership, 100% repatriation of capital and profits, more relaxed import and export regulations and, above all, exemptions from certain taxes and tariffs.
The region’s FDI regulations
The United Arab Emirates (UAE) has a relatively open policy towards foreign direct investment (FDI) and actively encourages investment in the country through various incentives. FDI regulations in the UAE allow for 100% foreign ownership of companies in most sectors, except for some like oil & gas and media.
By protecting foreign investors through bilateral investment treaties with many countries, the UAE has cemented its position as a central hub for businesses worldwide.
Tax regulations in the UAE
Although the standard VAT rate of 5% applies to the supply of most goods and services within the UAE, some supplies are exempt from VAT or carry a 0% tax rate. For instance, supplies for the export of goods/services to countries outside of the GCC and supplies related to international transportation are subject to zero-rated tax. These beneficial provisions reduce the overall cost of procurement of such supplies in the region.
Customs regulations in the UAE
The UAE is home to 12 commercial trading ports, and over 60% of the incoming cargo in the GCC arrives through the region’s seaports. Moreover, UAE’s strong and beneficial customs regulations make commercial activity via seaports lucrative for various international suppliers. As a result, the region has exempted all goods imported into FTZs from customs duties. Further, re-exports from these free zones are not liable to duties and taxes.
Want to expand your business in the UAE?
If you answered yes, it is vital to understand the different laws in the UAE that impact procurement. This way, you can manage compliance efficiently and take advantage of the laws in the region that promote supply chain mobility. With a procurement supply chain partner like Moglix, you work with business that are complaint with laws and regulations that govern the region, ensuring seamless business setup and operations. Know More
Building Strong Supplier Relationships in UAE for Business Growth
Building Strong Supplier Relationships in UAE for Business Growth
Supplier relationship management is an integral part of every supply chain, no matter what part of the world your business is in. For companies in the UAE, supplier relationship best practices may be particularly crucial since the region is among the top importers in the world. Moreover, reductions in global trade barriers have made it possible for companies in the middle-east to source materials, goods and services from various top exporters in the world, like China, India, the USA and Japan.
If your business is established in the UAE, strong relationships with vendors across borders can help you scale up quickly. Supplier relationships in the UAE also impact the procurement supply chain in many ways, as outlined below.
Vendor relations in the procurement supply chain
Here are the key benefits of vendor relationship best practices for your supply chain over the long term.
- It encourages supplier-led innovation
- It results in cost savings by eliminating the need to set up new contracts
- It helps form partnerships with suppliers whose goals align with yours
- It strengthens your supply chain and reduces fragmentation of the product procurement
- It improves operational efficiency by eliminating shortages and maverick purchases
Five tips for building and maintaining strong supplier relations in the modern world
Building good relations with your suppliers is tough, and maintaining them can be tougher still. Nevertheless, here are some industry best practices you can adopt to boost your supplier relationship management.
- Keep the lines of communication open
- Understand what your suppliers offer
- Choose vendors whose offerings align with your needs
- Draw out detailed and precise contracts to eliminate ambiguity in your dealings
- Uphold your end of the contract and pay your dues on time
Digitization: The need of the hour to tackle challenges in supplier relationships today
Supplier relationship management can be fraught with issues like a weak SRM strategy, failure to align supplier-client priorities, poor communication between the parties involved and even trouble enforcing the contracts involved.
Digitization and e-procurement can be revolutionary game-changers here. With digital transformation elevating your SRM practices, you can screen suppliers more effectively and partner with the right vendors. It also facilitates better communication with your vendors and leaves little room for ambiguity in contract management.
Build and maintain supplier relationship with experts
Managing supplier relationships in the UAE is a continuous process that needs to be updated periodically to keep pace with industry best practices. An expert procurement and supply chain partner like Moglix can help you navigate this evolving requirement, leaving you free to focus on your core business. Know How
3 reasons to perform procurement spend analytics
3 reasons to perform procurement spend analytics
What are you buying? Whom are you buying from?
How much have you spent on it, and how do the outlays compare to last year?
As an e-procurement professional today, these are only some of the many questions you will need the answers to. This is because monitoring and managing spend across the supply chain are integral to procurement leadership. And spend analytics can help you here.
What is spend analytics in procurement?
Spend analytics is gathering data related to an organization’s expenses, sorting, grouping and classifying that data, and then analyzing it to gather meaningful insights on where every penny goes. The end goal is to optimize costs and maximize profits.
3 key reasons you need procurement spend analytics
Spend analytics is pivotal in controlling and optimizing expenses in the procure-to-pay cycle. Here are 3 key reasons procurement leaders of today should prioritize this process.
1. Improved spend intelligence
With a robust spend analytics program, you get improved visibility of the costs incurred on procurement. Spending intelligence such as this can be crucial to reviving and optimizing your business supply chain. It also allows you to make more confident spending decisions because you are aware of how much your business is spending.
2. Easier identification of savings opportunities
E-procurement coupled with spend analytics also makes it possible for you to identify the areas that hold great potential for cost savings. By cost-cutting where you can and having a flexible procurement budget where needed, your business can benefit from incremental savings that stem from smart expense optimization.
3. Better supplier relationship management
Vendor management is pivotal to building profitable supplier relationships across the procurement cycle. And the information gathered from your data analytics processes can be invaluable in this regard. As a procurement professional today, you can use the insights gathered to partner with suppliers who meet specific criteria, promote supplier development, and build better relationships with your vendors.
Another challenge that procurement managers face is understanding KPIs they need to track to understand spends better. The key performance indicators (KPIs) to measure the effectiveness of your organization’s procurement spend analytics include:
● Cost savings
● Category-wise spending
● Supplier performance
● Vendor management
● Operational KPIs
Optimize your procurement with world-class spending analytics
Moglix offers intelligent spend benchmarking solutions that allow you to compare your procurement expenses with industry benchmarks and optimize your spending. Contact us today to know more about how our spend analytics solutions can help you on your path to absolute digital transformation.
Make the transition to sustainable procurement with this 5-step guide
Make the transition to sustainable procurement with this 5-step guide
With ESG business practices gaining prominence worldwide, sustainable procurement may be more relevant than ever for your business. In theory, sustainable procurement is simple enough; it involves integrating ESG factors into your organization’s supply chain and procurement process. When done right, sustainable procurement can improve your brand reputation, promote better supplier relationships and increase profitability.
Data from the World Economic Forum shows us that sustainable business projects may lead to cost savings of 9% to 16% and can increase revenue by up to 20%. Research by Hackett also reveals that around 92% of companies are already poised to have a sustainable procurement program by 2023.
Your business can also join this league by adopting an immediate and effective action plan to make procurement more sustainable as we journey into a new year.
A simple, 5-step plan to achieve sustainable procurement
Here is what your business can do to make the transition from conventional to sustainable procurement faster and more effective.
1. Identify the critical areas in your supply chain.
Whether you follow conventional sourcing practices or have partial e-procurement implemented in your business, the first step to sustainability involves identifying the areas that matter. For most organizations, the critical areas in the supply chain include sourcing, negotiations, contract management, vendor management and payment, thus completing the procure-to-pay cycle.
2. Evaluate and define sustainable criteria for your business procurement
Once you have identified the key areas in your procurement cycle, evaluate how sustainable (or unsustainable) they are. This will give you a clear idea of how far you have come and how much you need to go. You can then define the sustainable criteria you must meet in each critical area of your supply chain.
3. Perform supplier due diligence
Supplier due diligence may be just as crucial as supplier relationships in the journey to a more sustainable future. Before you sign a contract with a potential supply partner, evaluate their commitment to sustainability and assess if you have shared business values. In the long run, this will make vendor management much more accessible and help you progress more quickly on the path to sustainability.
4. Develop the roadmap for sustainable sourcing
The next step to sustainable procurement is developing a roadmap that makes your strategy for the future clearer and easier to implement. First, identify the critical business practices you want to focus on to future-proof your supply chain sustainably. Automation, paperless contract management, digital transformation and strict adherence to your organization’s ESG goals are essential pillars of your strategy.
5. Roll out your plan and review it periodically.
To complete the action plan towards a more sustainable procurement process, you need to roll out your developed strategy and monitor its implementation. For best results, it is advisable to review your plan periodically, identify weak areas, if any, and work on strengthening sustainable practices within your procurement department.
Want to accelerate the shift to e-procurement and sustainability?
Moglix can help you with this. Our end-to-end procurement solutions can overhaul your supply chain procurement strategies an help on your path of digital transformation, while keeping in mind your sustainability goals. Contact us today to learn more about how this works
Do you have the right strategy to reduce indirect procurement costs?
Do you have the right strategy to reduce indirect procurement costs?
Have you successfully implemented a procurement cost savings program, only to discover that your procurement expenses still need to be under control? If you answered yes to that, indirect costs related to procurement might be the weak link here.
While direct expenses are easier to track and control, indirect spending is easier to miss. This is changing now, with around 70% of procurement leaders increasingly shifting focus to regulate indirect spending in their supply chain. Your business can also benefit from this approach. However, the first step of this journey is decoding what qualifies as indirect costs in the procure-to-pay cycle.
What are the indirect spends in your supply chain?
Indirect procurement costs are those expenses that are not directly related to your production cycle or the sale of goods and services. These outlays may still be necessary for various ancillary areas of your business to function smoothly. Some common examples of indirect spending in procurement include the following:
● The cost of renting your office premises
● The cost of procuring IT support
● The expenses incurred on office stationery and supplies
● The purchase of office furniture
● The purchase of maintenance, repair, and operation (MRO) consumables
Three fail-safe ways to reduce indirect procurement costs
Here are three tried and tested strategies to keep your organization’s indirect procurement costs from ballooning beyond the budgeted limit.
1. Identify the vulnerable points in your procurement spending.
To effectively save on indirect costs, you must first identify areas where your business inadvertently spends more than necessary. A quick analysis of your historical procurement spending can help zero in on these weak links. Then, once you know what to cut down on, you can devise a plan to reduce these outlays.
2. Compare your supplier options before making a decision.
MRO procurement, office supplies, furniture, and other indirect heads may not vary significantly in quality from one supplier to another. So, compare your options and partner with a cost-effective solution vendor. Also, indirect procurement is not directly tied to production. This gives you more freedom to choose suppliers and vendors who offer the best value for money.
3. Automate your procure-to-pay system
Reports indicate that complete digital adoption and e-procurement can deliver cost savings of 45% or more. By extension, automation in indirect procurement can single-handedly help reduce wasteful expenditure and improve profitability. It also improves visibility of expenses and make the supply chain for indirect procurement more effective and efficient.
Want to get off to a great start? Say hello to your smart procurement partner!
A digital procurement partner like Moglix can help streamline your organization’s procure-to-pay cycle and optimize your procurement spends without compromising profitability. Get in touch with us to step into the future of procurement, with our tech enabled integrated e-procurement solutions.
We are ready to lead you into the future of B2B commerce and Supply Chain.
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