Every day, deliveries pour into at our offices and branches. Scores of services are provided too. But who's doing the buying - and who are the suppliers? More to the point, are the right purchasing decisions being made for our business?
At ground level, I could find out some of the answers. For example, this morning I saw Sandy at reception signing for six large boxes. By examining the delivery note, I could have identified the supplier and, most likely, the price paid and who ordered the item.
But how well were we doing in capturing this information on a company-wide basis and presenting it in a meaningful way - seeing the big picture across thousands of transactions?
This is vital because we can only improve budget management and efficiency when we have some baseline idea of how we're doing. Mitigating risk, ensuring compliance, improving processes, and sharpening sourcing can only be achieved once you have some business-critical insights.
As a company, we'd made attempts at 'spend analysis' in the past but hadn't got very far.
This is what I managed to find out:
- Two departments had kept meticulous records of suppliers, items purchased and prices paid. In the absence of any company system, they'd created spreadsheets. But these two units categorised goods in different ways to each other. Their information was trapped in silos too. It was hard to access and tricky to decipher.
- As for other units... well, readers of a nervous disposition may wish to look away now. After some awkward discussions, I teased out the fact that record-keeping was vague at best. I could see the business reason for this. My colleagues were often working flat out and made 'seat-of-the-pants' purchasing decisions because every other method was cumbersome. The result was a mess. Records existed but purchases, prices and supplier details were massed together in a congealed lump.
- Perhaps most embarrassing of all were the company spending reviews and C-level information. I found some presentations from six months before. On the surface, they looked tidy enough. But they just didn't square with what I'd seen earlier. Instead of clear facts, our executive team were using analysis based on old, incomplete data and some imaginative guesswork. Spending patterns, opportunities and challenges were going undetected. This was costly and risky.
How could we turn things around?
It was obvious we needed our spend data to be fresh, rich, accurate, and accessible. To really add value, every business activity and system needed to be connected.
We also had to get some powerful, intuitive tools so this colossal amount of information could be translated into boardroom-ready analysis - to promote better decision-making. That way, we could handle sourcing, risk, and compliance in the best way.
I also reckoned it would be great if these insights could be accessed 24/7 on our team's phones or tablets and then dissected and re-examined from dozens of different perspectives? That would be our goal ultimately.
At this point I almost felt the brief was getting too big. Slightly overwhelming. We didn't have the IT resource to design something ourselves. Hiring someone was an option. But we really needed something quick to deploy and integrate. It had to be proven, easy to use, and come with stellar support.
Even though we hadn't got an answer yet, the wish-list was crystal clear.
Now it was time to get deeper into the process and see what else we needed.
NEXT TIME: Improving basic control and visibility of the day-to-day buying process.
Been affected by what you've read?
If you work in Procurement, Finance, or somewhere in between, then you'll probably identify with Dan as his story unfolds. We understand Dan's challenges too. And we've got solutions that can help. Contact us and we'll be delighted to explain more.
Did you miss the last blog in this series? Read "My Eureka moment & how I created my game plan" here.