“This seems like a problem we can actually do something about,” says the CEO when the executive team re-convenes. “Let’s outline what we would need to do to get 90+% of purchases going through the right process.” As usual, it’s Mary who takes the marker and stands to record the team’s thoughts on a flip chart:
- Remove paper from the equation - make the entire process electronic (Standardize the way all purchases are made, eliminate communication lag time and capture a history of all activity)
- Build authorization policies and the approval hierarchy into the system so people don’t need to know the details – the right process is always followed by default
- Save everybody time by automatically approving purchases that are obviously OK based on specific criteria such as value, supplier, requestor, etc.
- Give managers full visibility of previous and in-process expenditures vs. budget in order to make better decisions; give them control over when they focus on purchase requests (e.g. end of each day); automatically route requests to the right stand-in when a manager is out
- Make supplier agreements very visible to people at the time of purchase – make them impossible to miss
- Give people the ability to shop and compare multiple sources from “within” the system; automatically route appropriate requests to procurement for competitive bid assistance
- Make the system extremely easy to use; accessible anywhere (office, home, or on the road); and always available so it becomes the fastest, easiest way for everyone to get what they need
“You know…” say the CFO and CPO almost simultaneously, “In addition to saving the $11 million we already identified, if we put that type of system in place, we have the framework to do lot of other good things as well.” Mary then lists on the board with everyone’s input:
- Reduce the real cost of each PO by taking less of everyone’s time
- Automate the invoice matching process in AP
- Perform more thorough spend analysis
- Gain better visibility of the overall ‘cost pipeline’
- And more!
So… the CFO and CPO agree to jointly lead an effort to put such a situation in place as soon as possible. The team leaves the CEO’s office happy for once, knowing this was something they could do in a matter of months that would have a noticeable impact on the bottom line.