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Streamline Your Tech Supply Chain with Central Procurement

Learn How to Spend Efficiently and Reduce Risk

Centralized procurement has emerged as a highly effective supply chain strategy, particularly in the wake of the pandemic and the resulting disruptions. When looking to improve your purchasing process, how do you know if this is the right approach for you?

What is Centralized IT Procurement?

In general terms, centralized procurement is a system wherein a single team or department handles the purchasing for a business. The decision-making is centralized, leading to higher transparency and reducing the risk of duplication.

Within the IT channel, centralized procurement refers to purchasing tech hardware from a trusted vendor in a central location with the need to deploy the gear across borders.

The Benefits of a Centralized Procurement Strategy

In comparison to a decentralized in-market approach, the benefits of using a central purchasing approach include the following:

Central buying allows for increased purchasing power and benefits of scale

This means significant cost savings. When working with a trusted vendor with whom you have built a solid foundation, you can negotiate better prices and leverage buying in bulk for discounts. This can be considerable when compared to in-market decentralized buying, where you are subject to currency conversion rates, revaluations, and the risk of maverick spending.

Centralized purchase orders can decrease lead times

Streamlining your procurement through a trusted vendor significantly benefits the project’s lead times. This means less time worrying about finding the right equipment and the stock needed in the destination country. By removing all soft efficiencies, like multiple onboarding efforts, multiple time zones, and multiple languages, you can work with a single supplier with one purchase order for the entire project.

Centralized ordering allows for standardization and compliance

Working with a trusted vendor ensures easier adherence to your company’s procurement policies and procedures. It also means that engineering teams can easily standardize the IT hardware across the business and allow for staging before going to the global offices.

Less risk when compared to decentralized buying

All these points come together to reduce the risk to the business. Improved vendor management, reduced maverick spend, and increased visibility all come together to improve efficiency when procuring IT hardware.

In-Market Decentralized Purchasing

In-market or decentralized procurement is often the more traditional approach to procuring hardware for global offices or a project. While it may appear to be the easier approach as you completely remove the need to import/export the products, it does come with quite a few issues.

Buying in-market will cost you more. There are quite a few reasons for this, such as wholesale pricing tiers or profit-shares with international suppliers pushing up margins. As such, a decentralized approach often leads to suboptimal spending, and you completely miss out on the benefits of scale.

If you are looking to outfit various global offices, an in-market approach opens up a lot of soft inefficiencies, which can result in lengthier lead times and increased unnecessary administration burdens. While you benefit from vendor diversity, you are at risk for stock issues and dealing with additional risks.

There are some disadvantages to the central procurement model, such as reduced vendor diversity and less local specialization. The major pain point for the IT channel is the logistics of the project and not understanding local customs requirements to deploy the hardware.

For end-users in the tech supply chain, the benefits are endless.

For channel partners, like Original Equipment Manufacturers, Value-Added Resellers, and distributors, the benefits come in retaining and closing international deals.

What Central Procurement Means for a Reseller

No matter where you sit in the supply chain, the most obvious approach would be to source the hardware locally in each foreign country.

So, if you are still considering an in-country model, the following considerations need to take place:

Your sales team will lose out on (the majority of) the sale to foreign VARs
The client will need to raise multiple purchase orders

The client will need to handle a more complex project management exercise with several soft inefficiencies at play (i.e., stock availability, lead times, and price lists)

However, a centralized purchasing approach will allow for:

Increased incentives in global deals
Expansion out of saturated local markets
Simpler projects for the clients
Faster deal close times

Delve into what centralized tech procurement means for a VAR.

How Do I Get the Tech Gear to the Global Offices?

Solutions to the Import Complexities

When it comes to the actual deployment part of global procurement, it can turn into a blame game of sorts. Buyers feel that their suppliers should oversee the import process, while the IT channel partners often do not possess the intricate import knowledge to compliantly clear customs.

Relying on the local offices to manage the import of IT hardware is a one-way street to a stuck shipment. Moving tech gear across borders carries significant financial and legal risks. Moreover, importing tech gear requires strict compliance with various regulations. Each of these is country-specific, and the legislation is ever-changing, so you will need to be entirely up to date on all aspects of each license, permit, or compliance document.

Any mistakes or errors in trade compliance documentation can result in stuck shipments, seized goods, or even the forced return of the shipment—something neither you nor your client will want to deal with.

An IOR can easily mitigate all import/export concerns – getting your goods where they need to go.

What is an IOR?

Can a Freight Forwarder Help Clear Customs?

Short answer – no. Global trade may seem easy – just moving gear from one country to another. While the logistics portion may be simple, the issue lies within customs. If you have ever tried to ship tech hardware before, you will know that trying to navigate the maze of compliance requirements and customs regulations is highly complex. Furthermore, the risk of making even a slight error in documentation or misinterpreting a regulation can result in stuck shipments, fines, penalties, and even destroyed cargo.

This all boils down to the nature of technology gear – it being considered dual use. You will need a partner who understands all the nuances and regulatory requirements to move these goods through customs compliantly.

Look how we differ from a carrier here.

How to Implement Central Procurement: A Checklist

Here are some best practices for the central procurement of IT hardware:

Develop a procurement policy: This should define the roles and responsibilities of the procurement team, as well as the procedures for sourcing, purchasing, and managing IT gear.
Identify the organization’s IT requirements: This includes everything from understanding the hardware types needed, quantities needed, and any budget constraints.
Build a vendor list: This list should include qualified and trusted vendors who can provide the required hardware at competitive prices.
Negotiate contracts with vendors: These contracts should define the terms and conditions of the relationship, including price, delivery, and warranty.
Implement a procurement workflow: This workflow should define the steps involved in the procurement process, from requisition to delivery.
Track and monitor procurement activity: Tracking spending, order status, and vendor performance.
Ensure you have the right partners: An Importer of Record can assist with the logistics and customs clearance of the goods to your sites.

An Importer of Record (IOR) will manage:

Compliance: Before shipping even starts, an IOR will ensure that all the goods have the correct country-specific requirements to clear customs.

Cost Efficiency: The goods can be bulk ordered and consolidated by procuring centrally. Bulk orders can result in discounts from your partners, incentivizing purchasing all the hardware from a single vendor.

Simplified Project Management: This means a single purchase order for an entire project. The IOR will facilitate the entire process from pick up to drop off. The whole process is entirely transparent, with accurate and upfront lead times. You can sit back while we manage the entire project, ensuring delivery to all the global offices.

Central Purchasing to Global Deployment – A Full Solution

The benefits of central procurement far outweigh buying locally. The central office can have greater visibility over the goods being purchased, and economies of scale through central procurement means lower budget requirements for your clients. Lead times are inherently shorter, and billing transactions are simplified to a single vendor. This all results in less risk and using your trusted network to supply the hardware. No matter where you sit in the supply chain, an IOR can help you fulfill this strategy.

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