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The hidden cost of IT procurement and logistics

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Florance Hare

Florence Hare | Head of Procurement | Supply Chain Services

If you’re planning an IT overhaul, one of the most important factors to take into consideration is cost. Many things can go wrong at various stages of the procurement and logistics process, resulting in an invoice figure that you weren’t expecting. It’s important to plan properly and keep varying lead times in mind in order to avoid risks, delays and unexpected costs – or at least, keep these to the very minimum.

Here are some hidden costs you may encounter at different stages of the process:

  • Quotation

Basic human errors can set back the entire process. Manual processes add time as well as costs and risk. Data errors due to manual entries have a knock-on effect across the entire IT procurement and logistics process. This includes delays in procuring equipment, delivery delays, and inaccurate reporting – all of which ultimately impact your budget, cost projections and planning strategy. With a linear module there’s no holistic transparency and visibility. With a centralised e-procurement solution, you can have a view of your total cost of ownership and troubleshoot an entire project at the touch of a button.

  • Procurement

Incorrect products, configurations, buying out of specification and changes to orders can be difficult to control, causing massive disruption to your business operations. Repeating steps within the procurement process doubles up workloads and wastes valuable resources and money.

  • Sourcing

The inability to consolidate IT equipment before shipping and a lack of export compliance knowledge add costs, delays and risk which impact delivery and project timelines. Instead of focusing on your business, you now have to worry about lack of inventory, project deadlines being pushed out, increased spending and rethinking previous implementation decisions that were made.

  • Shipping

Having to ship products individually increases carbon emissions and costs while reducing visibility into your order status. Decreased visibility makes it difficult to plan, which leads to lack of inventory, equipment installation delays, and poor service delivery to your end-user clients.

  • Clearance

Incorrect paperwork provided to customs at the destination country can not only set you back in terms of time but it can also set you back financially. For example, if licence and import requirements are not met, you’ll pay penalties and additional costs.  Customs may confiscate and destroy your goods to recoup their monies lost, leaving you to reorder and reship the same equipment while trying to ensure the paperwork is correct the second time around. Ultimately deadlines can’t be met, putting a strain on end-user relationships.

  • Delivery

Partial deliveries delay project timelines since goods are delivered to your or your client’s site in individual pieces. This escalates costs due to delays in the delivery of goods/equipment and impacts productivity.

Partially delivered IT equipment has to be stored until all the equipment has arrived. Items could get misplaced, and confusion can occur regarding which items were allocated to which project. Without electronic documentation detailing who signed for equipment at the delivery or client site, and when, it’s difficult to work out what date the various items arrived on, who received each item, and where the equipment has been stored. This can lead to major time delays and frustration, which significantly impact costs.

  • Invoicing

Multiple invoices from many different vendors instead of one consolidated invoice causes productivity issues due to  you or your end-user client having to sum up all invoices received to obtain an accurate view of all costs associated with the ordering and delivery of the equipment. Multiple invoices also hide costs due to lack of transparency – so it’s difficult to claim back taxes and VAT. Without digital/electronic documents, invoices are not generated quickly and are prone to errors due to manual entries. You also don’t have easy access to invoices at any time, from anywhere. Electronic invoicing saves time and money, and reduces the paper trail impacting sustainability.

Lack of communication can be a severe pitfall when a company goes global. Language and cultural issues are amongst the trickiest challenges to overcome. Be mindful of, and prepared to deal with, cultural nuances, and respect cultural diversity. Leverage available technologies to enable dispersed teams around the world to contact one another for support and ideas. Implement collaboration tools which allow people to share information virtually, in real time – removing the burden of scheduling, rescheduling, and unnecessary travel all impacting your bottom line.

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