The universal idea of running a business is to make profits. It is well-known that businesses leave no stone unturned to register handsome profits in their books to be in the goods books of their stakeholders. And they do it by following two time-tested methods: (i) By increasing revenues, and (ii) By reducing costs.
The current situation wherein the COVID-19 pandemic has reached every corner of the world, businesses are hit hard with almost every industry coming to a screeching halt. With nosediving sales figures, scarcity of raw materials, threadbare logistics, and unsure delivery times, cutting corners has become the mantra for their very survival. This has necessitated the need for operating with squeezed budgets, minimal resources, and adopting, simpler, faster, and innovative business models.
To achieve this, companies are making the best use of the available resources and are also getting rid of cumbersome business practices and procedures. Procurement is no exception to this. Today, organizations want to set up flexible and efficient procurement teams for handling their day-to-day buying activities. However, with approvals waiting to be cleared at multiple levels, procurement could be one of the most time-consuming processes for any company. Also, adherence to the organization’s procurement policies turns out to be another core challenge. Along with it, handling of the tools used to procure goods and services requires specialized training and expertise, which prevents any employee from taking part in the procurement process.
For instance, during my interactions with many global CPOs, it came to light that the procurement system in many companies fails to offer simplified end-user experience for their employees. It was also observed that companies would like more and more of their employees participating in the procurement process instead of giving total control to the procurement department.
However, according to The Hackett Group, 2018 User Experience and Maverick Spend Study, only 40% of companies have the required procurement technologies and solutions in place. Ardent Partners’ Procurement Metrics that Matter in 2019 highlights the CPO’s assessments of their organizations’ procurement agility. It turns out that only 27% organizations were highly agile, 64% were somewhat agile and 9% were not agile. Also, according to Ardent Partners’ Procurement Metrics that Matter in 2020, only 34% of all businesses have an active supply risk program. This indicates that many businesses have not really explored the potential of procurement technologies and their benefits.
To overcome these challenges, the concept of ‘guided buying’ comes to the rescue of businesses that like to make the most of their procurement systems. As the name suggests, guided buying is a much simpler way of procuring items, from a given set of suppliers, and at the best possible pricing and terms. It frees up the time of procurement specialists, enables the participation of other employees in the procurement process, improves adherence to the company’s policies and keeps a check on the spend by automatically exercising controls. It eliminates the need of having multiple systems and streamlines the procurement process.
Guided buying requires no or little knowledge of the procurement system. It enables employees to participate in the procurement process without any hassle. End users (the ones who use the guided buying system) need not invest much of their time in learning the procurement cycle and compliance terms, and at the same time, seasoned employees do not have to train these end users, thus enabling them to focus on other core and strategic initiatives.
The very idea of guided buying is to enable end users with limited knowledge of the procurement process with the power to procure goods and services.
Following are some of the advantages guided buying can bring into an organization’s procurement process:
Standardized Processes and Pre-built Workflows: Guided buying transforms the cumbersome and complex procurement process into a standardized procurement process with pre-built approval workflows.
Increased Compliance: It directs a buyer to purchase from the correct channel such as webforms, punchout catalogs and internal catalogs. The end user follows the standardized procurement process and most of the buying happens within the system. Budget is defined for every cost center/department.
Informed Decision-making: The end user makes intelligent and informed choices based on frequently bought items from preferred suppliers. Guided buying also helps a user to be aware of the purchasing policies upfront and stops them from bypassing any.
Monitor Exceptional Purchasing: It also allows employees to justify the business need in case they would like to raise an exceptional buying request.
Improved Efficiency: Guided buying enables the procurement process to be performed with minimal manual intervention and requires less time to train the end users.
Increased Savings: The guided buying system onboards preferred suppliers and negotiated pricing thereby enabling end users to buy from these suppliers alone and at specified prices. Hence, no buying happens outside the system minimizing the changes of any extra spending.
Conclusion
Many companies are yet to streamline their procurement process and find out ways to encourage their employees to participate in it. They also need to evaluate if their procurement processes are complex, cumbersome, and difficult to understand and follow.
With its ability to simply the process, guided buying can be a gamechanger in the procurement landscape to help businesses maximize their savings and improve their bottom lines.
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