Procurement automation should speed up processes and free employees from repetitive time-consuming administration. Enabling staff to focus on higher value tasks.
According to a Michael Page 2018 survey, half of the procurement workload is regarded as tactical in nature. And a significant proportion of this could be automated.
In procurement a high percentage of jobs and processes are repetitive which makes them ideal for automation. So how can you automate procurement effectively? To get you started, here are our top 5 things to focus on.
The first step in automating procurement, in any organisation, is understanding the requirements of the people within your organisation who actually instigate the buying process – the users within departments throughout your organisation. They, combined with your Category Specialists, are the process experts.
- What are the problems and concerns they face and how can they be fixed by automating the process?
- Where do the current processes work and where do they need to be made more effective and efficient?
- How would they like to be able to communicate requirements and evaluate bids?
- How would they like to place repeat orders and progress these?
- From a Category perspective, what is needed and why?
Get started by defining your procurement process. Focus on the areas which need to be accelerated or highlight where administrative tasks are the most cumbersome. In order to automate processes, it is important to make your processes as consistent and repeatable as possible. However, it is also important to identify areas where you need to retain flexibility.
Common problems, in the procurement process, that can be fixed by automation include:
- the approval process is manual and time consuming
- there are no standard or consistent ways to place and progress requirements
- contracts and specifications are not accessible or shared
- the sourcing process is too slow and difficult
- evaluating suppliers is a subjective process, relying on intuitions rather than data
One of the benefits of automating procurement is that if you do it right you should have access to better more reliable data. Such as order history, supplier profiles and contracts.
But the data you have available to you already should be your starting point. What story is your data telling you? Current data you have enables you to measure where you are, so that you can track any improvements achieved by the automation process.
To justify the need to implement automation, even is this is dificult to obtain, you might also need to gather data from the current procurement processes.
Some of the common problems data collection might highlight include:
- inconsistent track records of suppliers
- inconsistent prices from the same suppliers
- a maverick buying problem
- failure to enforce compliance
- not able to recognise when volume discounts could be applicable
An efficient sourcing process can only be achieved if the suppliers are on board. Make sure you get their input.
Automation can be a benefit for your suppliers, as it should ensure more effective real-time communication, prompt payments and reduced manual workload for both parties.
If automation is effective, then suppliers should be able to respond to bids more quickly and have easy access to contracts and important order information. Buyers should be able to track orders more effectively and an automated system should also enable records of orders to be kept. These can be used to evaluate your most effective suppliers.
Technology is the enabler that will allow you to automate your transactional activity. However, making the right choice is key.
A poor choice could result in your business being stuck with an inflexible process and limited buy in from system users.
The right choice is the solution that will encourage a positive uptake from staff, improve process efficiencies and lead to cost savings which will demonstrate significant ROI.
Solutions designed to automate the Procurement function only will not suffice. The focus is on making the process efficient and effective for all parties, not just Procurement.
Evaluating solutions can be tricky but any technology you consider should at least have the following features:
- Easily adopted– look for solutions with an intuitive interface – that is one that looks familiar to other systems and has few clicks to achieve an objective. Systems with catalogue like interfaces will appeal to users, as these are the most familiar to them. This encourages use and also minimises the time needed for staff training.
- Cloud Based– a cloud-based solution is important in a number of ways. Such solutions tend to be more cost effective and for any company with multiple offices and home-based workers, it enables workers to have 24x7 access to real-time data from the system.
To find the best fit, consider the size of your company, the type of spend you are targeting and the variety of spend categories you are seeking to cover.
Large companies are better served by an enterprise level platform designed to integrate with other internal systems and the more complex needs of a larger organisation. However, it is important to address specific categories with speciifc add on solutions to maximise on the gains.
Medium sized companies may have to choose a single solution. Guidance here would be to weight the needs of the users above all other concerns. Adoption, when there is only one solution, is critical for medium sized companies to achieve return on investment.
Once you have lined up a shortlist of potential technology providers then contact them all and request a one to one personalised demo to help you establish whether the solution is a good fit for your needs. Insist on the demo being tailored for your business and request key functionality you need is demonstrated. This will weed out inflexible suppliers and suppliers with inflexible products.
Other relevant articles and White Papers on this subject:
White paper download: 5 Steps for Procurement to impact on financial results
White paper download: 7 ways to transform eProcurement adoption
Automate procurement with Claritum
Claritum’s cloud based spend management platform streamlines the buying and selling of products and services. Purchasers, Buyers and suppliers collaborate in the cloud achieving better spend visibility and control, cost savings and efficiencies. Plus, since Claritum makes it an easy process to make a purchase, it is more likely approved suppliers will be used guaranteeing Procurement business goals are achieved.
For more information about Claritum contact us