The Problem Nobody Talks About
Every year, Indian mid-market companies overspend on procurement by 8-12%. On ₹100 crore of annual procurement spend, that is ₹8-12 crore quietly leaking out through habits so entrenched that nobody questions them.
The three biggest habits causing this overspend are not complicated. They are remarkably easy to identify. But they persist because changing them requires confronting inconvenient truths about how most companies operate.
Habit 1: Single-Vendor Relationships Without Competitive Pressure
The most common cause of procurement overspend in India is "comfortable vendor-lock." A company has been buying raw materials from the same vendor for seven years. The vendor is reliable. The production team likes them. Nobody has run a competitive tender in memory.
In this scenario, the vendor has exactly zero incentive to offer competitive pricing. Our data from 200+ reverse auctions shows an average saving of 14.9% versus the opening price. In one case, a manufacturing company in Pune was paying ₹9,200/MT for SS Grade 304 sheets. After their first reverse auction, the L1 price came in at ₹7,840 - a 14.8% saving on ₹45 lakh of procurement.
The fix: Run a reverse auction for your top 5 spend categories once per quarter. The threat of competition alone keeps pricing sharp.
Habit 2: Approvals That Happen After the Spend
In most Indian companies, the "approval process" is a formality that happens after the buying decision is already made. A production manager needs hydraulic oil. He calls the vendor, gets a quote, and asks his manager to approve. The manager approves because the production line needs to run.
This is not a procurement process. Real procurement control happens before the purchase decision - at the requisition stage. Without this discipline, you cannot check budget allocation, verify inventory levels, or maintain an audit trail.
The fix: Implement a digital PR → approval → PO workflow. Every procurement action must start with a formal requisition.