PROACTIS Blog

Purchase Authorisation: What is holding you back?

Charlotte Sutton
Charlotte Sutton,
PROACTIS
In Part 1, we explored the scope and objectives of the purchase authorisation process, and provided a very ‘rough cut’ estimate of what you could potentially save by improving the process. Now take 5-10 minutes to ask just a few people who perform that process what challenges they face to get a ‘feel’ for things:

What is holding you back from better performance?

When you talk with employees, see if you hear comments like:

  • “The requisition process just takes too long – the business moves much faster than the paper. Even with email, managers are often out so requests just sit.”
  • “I don’t even know what the proper procedure is…”
  • “If I actually waited to get official approval before I took action, I’d probably lose my job.”
  • “Who knows what suppliers we have discounts with – I can’t keep up with memos and emails saying I should buy from this supplier or that. Those emails never show up exactly the day I need to buy something.”
When you talk with managers, do you hear comments like?
  • “Requests come at me willy-nilly – it’s very hard to focus on making a good decision sometimes.”
  • “I can’t get a handle on my current budget position because I don’t know what purchases have not yet hit the books. Because of that, we’re frequently over budget by the end of the year.”
  • “People tell me all the time that they’ve found a better deal than what Procurement can get – I just don’t know and don’t have time to run that down. I just say OK when I think that person is at least trying to be cost-conscious.”
What tools and capabilities do you have today?

Below is a simple checklist of the tools and capabilities organisations focus on to improve performance. Do you have these in place?
  • Have you removed paper from the equation by making the entire process electronic? Has this standardised the way purchases are made? Has this eliminated approval lag times?
  • Have you built authorisation policies and the approval hierarchy into that system so people don’t need to know the details of your policies and procedures, and the system guides them through the right process automatically?
  • Does that system save everybody time by automatically approving purchases that are obviously OK based on specific criteria such as value, supplier, requestor, etc.?
  • Do managers have full visibility of in-process expenditures as well as budgets and actuals at approval time in order to make good decisions? Do they have control over when they handle purchase requests (e.g. end of each day) so they can give it proper focus? Are requests automatically routed to the right stand-in when a manager is out?
  • Are supplier agreements fully visible to people at the time of purchase so they are impossible to miss? Are employees asked to state their reason if they want to use a different supplier?
  • Do your people have the ability to shop and compare multiple sources from “within” that purchasing system? Are certain types of requests automatically routed to procurement or category specialists for competitive bid assistance?
  • Is that system easy to use; accessible anywhere (office, home, or on the road); and always available so it’s consistently the fastest, easiest way for everyone to get what they need?
Consider taking action…

If you have all of these tools and capabilities today, congratulations – you have what you need to gain effective control and visibility of the purchase authorisation process! If not, you have a lot of opportunity for savings. Learn more at PROACTIS Purchase-to-Pay to find a wealth of documents and tools you can use to develop a more in depth assessment and strategy in this area.
 
 
 
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