The changing business environment is driving organizations across industries to radically transform their procurement functions. So, as a procurement function head, you would face certain pertinent questions: Does your department need to control and influence every requisition raised by employees? Does such a level of control help your employees? Does it make procurement more efficient?
The fact is, when procurement gets involved with each requisition, business outcomes are often delayed. For instance, a time-bound marketing campaign becomes ineffective if contracts are not signed and purchase orders are not released on time. This should bring to your mind a different set of questions: Why can’t employees use negotiated contracts with approved vendors each time they need goods and services without involving procurement in all such requisitions? Doesn’t such a move help procurement focus on strategic growth initiatives?
Moving away from micro-management
By eschewing micro-level control, you can enable timely execution of contracts, resulting in better realization of business objectives. With technology as an enabler, procurement teams can choose to process only select requisitions, while ensuring desirable outcomes for business partners in a time-bound manner.
A catalog-based requisition process that helps users locate items with the help of images, along with details of prices, availability, turn-around time, vendors, and contracts, is the first step to making the buying process easier and faster. At the same time, you can use technology to restrict catalog visibility based on your organizational policies, as well as the scope of a user’s role and responsibilities. Empowering employees this way is not a matter of extending mere convenience, but also of ensuring responsible buying where employees weigh available options against business need.
Redundant controls lead to mass and ineffective actions
Redundant controls route requests to a user’s work list without any need for the user to make an active decision. For example, a business rule that routes all requests to the owner of a cost center irrespective of the nature (routine or exception), monetary value (high or low), and priority (normal or critical) of the request, overloads the work list. This eventually forces the approver to take actions in bulk, defeating the very purpose of control.
Redundant controls cannot be solely attributed to an organization’s policies or business rules. The extent to which traditional ERP systems facilitate visibility, accessibility, and usage of purchasing information for end users is also a factor. Although you might see procurement teams as custodians of such information and assets such as negotiated contracts, their dependence on technology makes them controllers.
Micro-level control also undermines the importance of negotiated contracts. More often than not, procurement teams become a bottleneck in facilitating smooth and timely fulfillment of business requirements. How can you overcome this issue? Leveraging technology to ensure complete compliance to business rules and execution of approvals, whenever required, based on factors such as category, value, and vendor, helps smoothen the process.
Curate more, control less
Once users have access to the right information, they can buy whatever they need independently. But, make no mistake, there are bound to be scenarios where self-service is not a choice. In such cases, where a requested item or service is not available in the existing catalogs, users require the procurement team’s support. An effective strategy helps keep exceptions below 20%. Procurement can identify such cases and selectively help users based on the inputs given by them.
By reducing focus on procurement transaction, the role of your procurement team shifts from controller to curator. With a more strategic role, procurement can enhance vendor selection, identify alternate sources, work hand-in-hand with product development teams, and negotiate the best terms and conditions for your organization to execute contracts.
Technology is the key
Employees expect a buying experience similar to online business-to-consumer (B2C) ecommerce sites on your procurement portal. According to Deloitte’s Global CPO Survey 2016, 70% chief purchasing officers are focused on improving user engagement and experience through self-service solutions. Modern eProcurement suites provide simple e-commerce like buying experiences with smart shopping carts, item search, seamless PO creation, and transmission through an integrated supplier portal, and eliminate redundant controls effectively. Technology-led smart procurement eliminates 90% of manual controls leaving procurement to play the role of a curator effectively.