From ordering to strategic sourcing: a valuable procurement upgrade
It pains me to see so many Procurement departments where employees spend much of the day ordering products rather than doing what they do best: negotiating cost-saving deals with suppliers. Not only is it frustrating for the buyer, but it’s also a shame that the department can’t live up to its full potential. By implementing a state-of-the-art procurement solution, you can streamline the department so that the entire company – and even your suppliers – can benefit from a well-functioning procurement process.
Simplify a capricious process
A big part of the problem is that processing orders for the entire company is time consuming and adds no real business value. Imagine that the Marketing Manager needs promotional materials for an event. In many companies, this means that the Procurement department is tasked with ordering these items and tracking their delivery.
In my view this does not make sense. The buyer often doesn’t fully understand what the Marketing department needs. This leads to one of two possible outcomes: either the buyer and manager invest a lot of time on a detailed briefing, or the buyer doesn’t order the right materials, leaving the manager frustrated and without the proper products. Lack of process integration furthermore often raises questions that are hard to answer: where is my order? when will it be delivered?
Needless to say, it is far from the most efficient way to work. Moreover, manually executing these tasks is prone to errors which can lead to high failure costs: wrong deliveries, wrong invoices, wrong payments, the list goes on. You could try delegating the work by letting end users place their own orders. However, due to complex administrative processes in ERP applications, this can result in unwanted maverick buying by end users.
This problem needs to be solved. Unfortunately, traditional ERP systems generally don’t offer what you need. Their functionality focuses mainly on direct spend which is a relatively straightforward and well-governed procurement process. The more capricious indirect spend is often not supported properly. Adding a stable cloud-based procurement platform to your ERP backbone, however, can result in much more control over the procurement process, which is beneficial for the end user as well as the Procurement department and your supplier.
State-of-the-art process optimization
The extension of your IT-application portfolio will simplify the buying experience of the end user, reducing the workload of the purchasing department. In a guided process, end users can order what they need. With a stable backend and an Amazon-like frontend, the platform is reliable and very user friendly. At the same time, it will streamline the purchasing process and reduce errors by eliminating manual tasks.
By optimizing procurement processes, you can unlock your organizations full potential. Think about the advantages of automating your sourcing, contract management, and procure to pay processes. It is even possible to optimize supplier life cycle management. How? Because all the information your department needs is stored in a centralized database, which is updated in real time. Digging for information in local procurement email boxes is a thing of the past.
When straightforward ordering is delegated to end users and previously paper- or email-based tasks are now automated, your buyers can substantially increase the time they spend on strategic sourcing.
And your suppliers? They benefit from being connected to the same interactive platform. This allows you to enable you to create a partner network with you suppliers so that you all profit from integrated processes to track orders, guide payments and keep terms of contracts.
Extending your application portfolio with a professional procurement solution will give you access to functionality that traditional ERP systems will never provide. It will lead to streamlined procurement and strategic sourcing processes and increased efficiency. This truly is a win-win-win situation for the end-user, the buyer, and your suppliers.
Curious about what a procurement platform can do for you? Please get in touch for more information.