How to optimize non-production purchases for Nigerien Businesses?

How can Nigerien businesses challenge procurement?

In a gloomy global economic context, competitiveness and the generation of a high profit margin ensure the development and survival of a company. But how do you get there? Two essential choices are available to any company that embarks on this challenge: develop its sales and/or reduce its expenses. The reduction of operating costs by theoptimization of non-production purchases is the option chosen by Nigerien companies. Niger has large companies in all sectors of activity and whose headquarters are located in Niamey. In this article, discover how Nigerian companies can challenge their purchases in order to reduce their operating costs by optimizing the management of their non-production purchases.

Niger, a diversified industrial landscape

Niger is a country in West Africa that has a diverse economic sector that includes businesses in various sectors, such as agriculture, mining, energy, trade, and services.

This is how we can cite in the telecom sector:

• Orange Niger, whose head office is located on Avenue de Djermakoye in Niamey,
• Airtel Niger located on the road to Diori Hamani Airport in Niamey,
• Moov Niger which is on the same boulevard as Airtel
• Sahelcom, which is the state-owned company and has its seat at the Niamey justice ring.

In the Hydrocarbon sector, we have:

• Sonidep, which has its headquarters located opposite the Nigerian customs office.

In the banking sector, Niger is not left behind with the proliferation of subsidiaries of large banking structures. We can cite:

• Ecobank Niger located on the Boulevard de la Liberté in Niamey,
• the BOA whose head office is located on Rue du Gaweye,
• the BIA, whose head office is located on Avenue de la Mairie,
• the Atlantic Bank, the BSIC,
• Sonibank located on Avenue de la Mairie etc...

Also the transport, hotel, distribution and mining sectors are well served by internationally renowned companies. The Nigerian market is thus full of potential suppliers in all sectors of activity. From banking services, to telecom services, construction, construction, through distribution and services, all these entities are developing offers that feed the Nigerian market.

The reduction of operating costs and more precisely the reduction and control of general expenses constitute an undeniable competitive lever for these companies.

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The role of non-production purchases in a company's competitiveness

Non-production purchases, also known as indirect purchases, refer to goods or services that are necessary for the operation of the company, but which do not directly affect its production cycle. This procurement category includes office supplies, furniture, IT services, IT services, marketing services, maintenance services, such as cleaning, maintenance, personnel safety, and logistics services. To benefit from these services or acquire this furniture, companies must use subcontractors.

Although non-production purchases are not directly linked to the manufacture of the final product, they play an essential role in the overall competitiveness of a company.

• Reduce costs: Non-production purchases often represent a significant portion of a company's total expenses. By optimizing these purchases, it is possible to achieve significant savings and improve the overall profitability of the company.
• Improving operational efficiency: the implementation ofa process for managing non-production purchases or indirect purchases effective can contribute to reducing lead times, minimizing stockouts, improving the quality of products and services, and strengthening internal customer satisfaction.
• Manage risks: Non-production purchases can represent major supplier risks, such as late deliveries, quality issues, or price changes. Proactively managing these risks, through relevant procurement strategies, solid contracts, and effective supplier relationships, can help mitigate their negative impacts on the business.
• Promote innovation and differentiation: non-production purchases can also contribute to business innovation and differentiation. By identifying innovative suppliers and seeking innovative solutions, businesses can improve their products and services, strengthen their market position, and stand out from the competition.
• Affirm social and environmental responsibility: Non-production purchasing also offers an opportunity to promote responsible business practices, such as the purchase of environmentally friendly products, support for local suppliers or the implementation of ethical purchasing policies. These initiatives can strengthen the company's brand image and meet growing consumer expectations for sustainable development.

How to reduce the costs of non-production purchases?

As mentioned above, indirect purchases are a significant challenge in reducing operating costs or operating costs of a company. Controlling non-production purchases can have real effects in improving its competitiveness. It is therefore essential to optimize and secure the process in order to optimize its profitability. The company must improve its purchasing method by applying a new indirect procurement management strategy more efficient and less expensive.

The expenses allocated to non-production purchases in a company represent on average 10% of turnover. In order to minimize this burden, the firm must put in place an efficient system. The best solution to overcome this situation is to reduce costs. In order to minimize costs, action must be taken at various levels, including the definition of real needs, the consultation of prices, the automation of purchasing processes, the evaluation of other alternatives and the respect of deadlines.

Definition of needs

To successfully implement this new source of financial savings, you must conduct a thorough analysis of your non-production purchasing needs. This step helps identify unnecessary or excessive expenses. Carefully assess the real needs of each department and eliminate superfluous or redundant purchases. The needs listed in the specifications must be limited to what is strictly necessary. This allows the firm to do without unnecessary goods or services constituting an additional burden.

Price consultation

Compare prices and conditions from different providers. By bringing competition into play, high-quality purchases can be cheaper.

It is also possible to reduce The costs of non-production purchases by rationalizing your suppliers, in other words by reducing their number. Choose those that offer the best commercial conditions. Consolidating purchases with a few strategic suppliers can allow you to negotiate cheaper rates and benefit from economies of scale.

You can also reduce your operating costs associated with indirect purchases by negotiating with your suppliers in order to obtain more favorable terms, such as reduced prices, volume discounts, longer payment terms, or free additional services.

Automation of purchasing processes

Use computerized tools and systems to automate non-production purchasing processes. Adopting tools, like Sourcing Force, can help reduce administrative costs, optimize workflows, and avoid human errors in managing indirect procurement.

Evaluating alternatives

Look for lower-cost alternatives for the products or services you buy on a regular basis. For example, explore online shopping options or consider cheaper options without compromising on quality. Join buying groups or consortiums with other companies in the same sector to benefit from preferential rates through group purchases. This can give you access to attractive price cuts.

Establishing approval processes

Create strict approval processes for non-production purchases to limit unauthorized spending. Pre-approval of each purchase can avoid impulsive or non-essential purchases.

Respect of deadlines

Last but not least, respect the deadlines. In fact, suppliers must comply with the deadlines agreed in the specifications.

Strategies to be implemented to optimize non-production purchases

The application of these new methods greatly reduces the burden allocated toCats out of production of a company. However, the implementation of an adequate solution must be closely monitored. A diagnosis is necessary to describe the real needs of the company in terms of services and goods outside of production. This system also makes it possible to define the weight of indirect purchases on finance. From this diagnosis, it is easier to find what actions to take.

Professional buyers aim to provide the best solution for the business. It should be accompanied by action plans as well as the various steps to improve the purchasing strategy. This solution must be in line with the expectations of the company and correspond to the characteristics of the supplier markets. Indeed, it should enable them to reduce their burden of non-production purchases.

And you? What do you think?