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Becoming "faster": Vital steps for strategic procurement
How can your organisation become faster in today's digital economy? Is it really possible to make your procurement strategy more agile and responsive without unnecessary cost or risk?
Survival of the fastest
In the digital era, speed is increasingly viewed as a 'right'. In our daily lives, we demand instant access to accounts, the ability to make purchases in moments and get an immediate answer to enquiries. High expectations are then mirrored in business. Sluggish responses are no longer tolerated.
Many enterprises have automated and transformed the front-end of their business to unlock revenue opportunities and remain competitive. Even Public Sector organisations have automated the way they engage and interact with citizens.
New technology is being embraced, the value of data unlocked and cultures overhauled.
But what about back-end systems and processes critical for managing the underlying costs to support the business? How long before speed becomes a priority for obtaining the goods and services that organisations need to operate?
Do you have to speed up?
Procurement teams and their colleagues in Finance are working flat-out to do a great job for their organisations, often amid growing pressures and scare resources. But here are three reasons why slow P2P processes cannot continue:
#1: Productivity gets held back: If the rest of the business becomes more agile, productivity and bottom-line performance will suffer if other teams across the business don't get the goods and services they need quickly.
#2: 'Slow' has a cost: In a data-driven business world, complex tasks can be handled quickly and effectively through automation. But when labour-intensive processes tie up employee time, the business is starved of valuable resources it desperately needs. These could be diverted to more important activities.
#3: Everyone else will see the problem: Businesses are becoming more transparent and relentless in their pursuit of efficiency. But cumbersome processes create business bottlenecks - and this cannot be tolerated by employees, managers, suppliers and ultimately the boardroom.
What's slowing you down?
There are multiple possible reasons for a lack of speed, depending on the nature of organisation. But one fundamental area where many enterprises struggle is with supplier assessment, qualification, monitoring and engagement. Research by Proactis among decision-makers across a wide range of organisations revealed that this was an issue for 45% of respondents.
The challenge is easy to grasp when you consider that suppliers tend to vary in their size, complexity, location and technical capability, while also numbering in their hundreds or thousands.
But if you want to become faster, leaner and smarter then this is an area to tackle with some urgency. In fact, getting this correct will provide the momentum for a successful strategic procurement approach where you can introduce a raft of other fast-paced P2P solutions over time.
What can you do?
Speeding up and improving the supplier management process could be achieved by hiring many more staff, but that would drive up costs massively. Another option would be to cut corners and be less diligent - but then risks would rocket and the likelihood of getting best value would diminish.
What's needed is a strategic procurement collaboration between Procurement and Finance. Teams should work together to implement a central supplier directory, establish procurement policies and standardise qualification and performance monitoring.
But that's only the start. With the right systems and tools, theory can be put into practice...at speed. Procurement can manage suppliers and maintain strong relationships - in a way that's streamlined and highly-automated. Important rules can be embedded, alerts generated automatically and transactions tracked instantly.
Suddenly, it's possible to begin to work towards accelerating tenders, sourcing, purchase orders, invoice processing and supplier communications...the kinds of things that make a tangible difference to day-to-day business performance.
Speed boosts performance
System selection should not be left to IT or Procurement alone. Research from Proactis found that only 51% of CFOs were helping to guide the application of enabling procurement technology. But not getting closely involved is a major mistake because Finance has skin in the game.
CFOs needs to be at the heart of the decision-making process - not only because of the financial acumen they can bring - but also because a faster, leaner and smarter Procurement function will deliver greater returns and performance.
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