At Claritum, we work with procurement services organisations to help drive purchasing process efficiencies and savings. These organisations range from small businesses providing a simple buying service, BPOs managing an outsourced purchasing service through to global multinationals with hundreds of sourcing professionals across many continents and a wide range of service offerings.
The one thing we consistently find? Inefficient buying processes.
Often, there’s no one defined buying process, and the larger, more complex the business is, the more variety there is in process.
Sure, the business may run ERP, and have the procure-to-pay cycle nicely automated, but few have nailed the processes involved in specifying, inviting suppliers to bid, evaluating and approving bids and getting approvals from customers.
In businesses large and small, without a defined method of buying, employees resort to highly manual online searches, emails to co-workers and suppliers and phone calls to iron out the details. It’s not uncommon for the process of specifying, bidding and buying to take several days to complete and involve many stakeholders, even though it’s a low value order.
Our experience at Claritum is that businesses that automate their buying processes can achieve significant, measureable and sustainable process efficiencies.
On average businesses that automate buying processes can save 56% of their buyers time. In effect doubling their buyer’s capacity.
Figure 1: Claritum Buying Process Survey
In a recent Claritum study of 21 procurement services organisations, we found that businesses could drive efficiencies in 8 key areas. The largest savings were in specifying, bidding and approvals (where 60-80% time savings could be achieved). Downstream efficiencies around order processing, deliveries and invoicing were harder to quantify as different businesses operate very different systems and procedures. But never-the-less the point remains businesses can double the capacity of the buying team over night through automating buying processes.
Automation has extra benefits, such as being measurable, repeatable and sustainable.
Tools help buyers to streamline business processes, such as specifying, running an RFx, gaining approvals and other key steps. Through automation, each step can be measured and reported, so buyers can evidence the value they bring to their organisation. They can prove that they have re-engineered a specification to reduce cost, or that competitive bidding has resulted in savings or cycle times have been reduced.
The benefits of measureable efficiencies can be huge. Management can ensure they have the right skill-sets in place, they can plan for busy or quiet periods and evidence the buying team’s value to senior management and customers.
Repeatable steps are also critical to process efficiencies as they enforce compliance to best practice and drive consistency in management reporting. In highly regulated industries, compliant processes are critical to an effective business operation.
New recruits can adopt efficient processes quicker and errors are reduced or eliminated. For management, repeatable steps provide the potential for yet further streamlining.
Sustainable process efficiencies can only be achieved through process automation. By sustainable, we mean efficiencies that become the embedded method within the business. They become the de facto standard operating mode. Automation locks-in sustainable savings.
Our survey also revealed some interesting benefits of automating the buying process. It releases employees from manual administration to add more value to customers and more satisfaction for buyers.
Anecdotal evidence suggests that buyers, freed from the manual menace, feel empowered to be more consultative, they can innovate earlier in the buying process, identify more appropriate suppliers, reduce supply risks and shorten delivery cycles. Customer feedback appears to indicate that they are more comfortable with self-service or assisted buying if they can access an expert buyer ‘on demand’.
So, if you want to double your team’s buying capacity, automate your processes.