Purchasing Pain and How to Fix It, Fast

Simon Dadswell
Simon Dadswell,
If your organisation's purchasing process is experiencing pain, then you have three options: carry on and suffer in silence, attempt to ease the symptoms, or tackle the root cause. The financial health of your organisation depends on what you do next. In fact, your future could be at stake. 
In our last blog, we highlighted 'three symptoms' that could indicate valuable resources are being squandered within your corporate purchasing process. Maverick purchasing, poor use of contracts and a lack of spend visibility can sap budgets, bloat admin workloads and harden inefficiency.

But, having heard the diagnosis, how should an organisation respond? Here are the choices.

Option #1: Carry on and suffer in silence
When it comes to our bodies, many people try to ignore the pain and power through. But it catches up with us sooner or later. In effect, many organisations have been operating in a similar fashion — muddling through. And they've been getting away with it ... until now.

What's changed is the rapid emergence of the new, frictionless and highly-competitive digital economy. Today, there's no room for waste and inefficiency. New organisations don't have the baggage of old paper-based processes and ways of working. If you don't match their efficiency, they may replace you. The prognosis is grim.

Option #2: Attempt to ease the symptoms
When a purchasing process is unstructured or lacks proper controls, then it's possible to hire more staff to deal with the snowballing administrative workload. It takes hours to assign PO numbers retrospectively, update budget spreadsheets and write email memos about compliance. But you'll be just about managing, not fixing anything.

Another response can be to purchase 'point systems' that address perceived bottlenecks. Sometimes these help a little but push problems further down the process, or prove incapable of dealing with complexity. This can lead to more costs and delays.

Option #3: Tackle the root problem
Today, it's possible to transform purchasing easily, affordably and quickly. Labour-intensive, manual systems can be replaced by light-touch electronic, streamlined processes ... loved by users, managers and suppliers. You can sense the relief when it happens.

Daily agonies can be remedied in moments in hard-to-reach areas such as:
  • Ensuring the complete buying cycle is consistent and fully transparent
  • Giving users every buying option available: from e-catalogues to procurement-assisted buying options
  • Providing a slick workflow and making authorisations effortless
  • Receiving supplier invoices electronically
  • Matching invoices automatically with purchase orders, enabling timely payments
  • Providing instant spend analysis to inform purchasing strategy
Take the right steps ... and your organisation will feel like it's never been in such great shape.

Getting a new lease of life
Transforming your purchasing is good news for everyone. But crucially, it can do wonders for your bottom-line profitability. For example, one of the largest police authorities in the UK with 35 administrative departments raising 80,000 orders a year has been able to automate its entire P2P process, reduce processing costs and create a full audit trail.

One of Europe’s commercial forestry companies – with employees in Ireland, the UK and Netherlands implemented a P2P solution from PROACTIS. As a result, it saw a 45% reduction in paper invoices while 99% of payments are now made by Electronic Funds Transfer. AP administration costs have been reduced dramatically.

A leading supplier of aggregates, ready-mixed concrete and services, operating across 44 states in the United States, has streamlined process controls on transactions and increased spend under management.

Discover more
Take a 15 minute health check of your purchasing capabilities — and get valuable insights. Alternatively, take a look at how you could transform your purchasing performance.

In our next blog, we'll be looking at improvements possible within Accounts Payable.