There is a popular saying that goes: “Don't change a winning team.” In times of crisis, another maxim that often comes to mind is: “Don't touch it, or you'll make it worse.”
Faced with the current scenario, most companies seek to implement orthodox actions to survive market turbulence. In this sense, headcount reductions, decreased production, strict cost control, and strengthening cash flow are among the measures most recommended by financial executives.
In an unsettled market, with rising exchange rates, exports threatened by currency devaluation in China, and credit rating downgrades for the country—just to list what happened this week—executives and shareholders wonder what can be done to keep return rates at satisfactory levels.
It is a fact that some companies exposed to the crisis have an enormous capacity to respond with innovation and manage, even in an unfavorable scenario, to increase their sales and secure good results. But there is another alternative for those who are more conservative or operate in more volatile markets: reducing procurement costs!
Increasing sales by 5% often requires a herculean effort from any company, demanding good management, structured processes, adequate logistics, and an eager consumer market. However, you might be surprised by the localized inefficiencies that can be addressed and controlled, especially in your organization's goods and services procurement processes.
The procurement department has always been viewed as an expense center, never as a revenue center. With a commoditized market and increasingly tight margins, purchasing has become a critical component of corporate profitability, raising an urgent question: how is your procurement department performing?
There are two tremendous opportunities that can be seized in these challenging times to drastically reduce procurement costs. The first relates to something that has already been done—your inventory. The second is associated with routine tasks that are often carried out inefficiently—your indirect purchasing.
Do you have any idea of the financial volume tied up in your inventory? Is there an accurate count of what is stored there? Who can guarantee that your demand replenishment planning policy (S&OP) is aligned with your financial model? It is far more common than one might think for companies to discover, after an assessment, millions of reais tied up in inventory without any active management.
Level specializes in assessing, planning, and establishing new policies to improve inventory management for large enterprises. Through our consultants, we provide accurate diagnostics, inventory itemization, and demand curve analysis using intelligent algorithms—aimed at fine-tuning procurement planning and identifying obsolete parts that can be liquidated on the market, all supported by system technology integrated with your company's ERP.
Another major opportunity for significant cost reduction lies in structured strategic sourcing processes. Recurring purchases of indirect materials and commodity service contracts, such as telecommunications, often become hidden drains on the procurement department's cost structure.
Because they are not strategic acquisitions or raw materials, these categories are frequently overlooked, leading to market inefficiencies such as low supplier competition, high process costs, and fragmented contracting.
Level has completed more than 800 strategic sourcing projects in the market, delivering an average savings of 11.0%. The service, which operates on a success-fee compensation model, encompasses company spend analysis, supply market research, seasonality assessment, RFQ drafting, supplier selection, contract negotiation, and procurement policy adjustment. All of this is powered by one of Brazil's leading e-Procurement platforms, fully customizable and integrable with any ERP.
As we know, the current moment calls for bold action! Standing by passively can result in unprecedented losses. Therefore, it is time to act! While everyone seeks innovation in production and sales, it is also possible to innovate procurement processes, delivering remarkable results for your business.
Level Group is at your disposal to conduct a diagnostic assessment of both your goods and services procurement processes and your material inventory. Contact us today! It will be our privilege to serve your company.
