This article looks at the use of business to business orchestrated Marketplaces and online catalogues to mitigate the people factor of any procurement process. People govern the success or failure of any procurement process automation.
By orchestrated, we mean that the process of establishing and managing suppliers within the Marketplace is totally under the control of the organisation’s Procurement team. Although the suppliers can make changes, they do so with the approval of the Procurement team.
We have come a long way since Aldus Manutius of Venice published the very first catalogue in 1498: a catalogue of the books that he was printing. “One of the strengths of the Aldine press was the extreme care with which the aesthetics and accuracy of printing were dealt with, down to the smallest detail. Aldus, for instance, employed one of the most outstandingly talented punch-cutters of his day.”1
To create our catalogues today the outstanding skill of a punch cutter is replaced by that of the software engineer. Providing the process foundations and templates to be able to create your online catalogue for purchasing goods and services.
2How people can influence success
One of the greatest barriers to effective procurement automation is people.
Let me explain that statement. Within your organisation, there could be any number of people from 10’s through to 1000’s. They will all have different needs and requirements to carry out their daily function. They may be able to consolidate these needs within a group or they may have a very specific individual need for a product or service.
If your systems, processes and procedures help these people or groups to do their job more efficiently and effectively, then these people are on your side and there is no barrier.
However, if your systems and procedures constrain and delay, then you have a barrier to adoption within your organisation.
How can you remove these barriers and help people within your organisation to buy what they need?
One of the most effective ways is to provide an orchestrated online Marketplace for them to make their purchases. An interface that makes it as simple as point, click and buy for the user.
Yes, I hear you say, that is great but…
What about those requirements that are not off the shelf? Or users who have different sets of common products they want to purchase? How does the Marketplace approach help there?
A Marketplace portal, with integrated RFx capabilities, helps significantly. Here you can specify variations to an off the shelf product or service. Or define a new requirement. Saving these for future purchase requirements, if that makes sense to do.
Users can use a structured closed bid RFx (RFQ/RFP) process within the Marketplace. With support for multi-part projects sourced from single or multiple suppliers to component level.
Employees can compare whether to single source an entire project or buy components from specialist vendors. Variances can be quickly and easily created to assess ‘what-if’ scenario planning.
Plus, if there are common products to specific users or perhaps regional variations. Then you can create different catalogue views for different user groups. This mitigates one of the most common reasons for the failure of a procurement automation system: trying to create a single process that works for everyone. Trying to force users to use the same process and page views, rather than tailoring their interface to their needs through a user or group-specific approach.
It also removes one of the main issues associated with generic Marketplaces (such as Amazon Business.) Where there are no options for non-standard or specific requirements and no way to control the supply chains or user selection of products.
Overall, the key is to have flexibility and speed associated with creating these user and group environments. Building flexibility around whether Procurement needs to be involved in the purchase process, controlled by the rules configured by Procurement.
3Procurement’s influence with an orchestrated Marketplace
An orchestrated Marketplace enables Procurement to capture and consolidate individual employee orders, without getting involved in the transaction detail. Aggregating demand for stocked products, configured kits, made-to-order and customised products and services.
This relieves Procurement from day to day transaction activity, since employees rapidly adopt the familiar online shopping experience of a Marketplace.
Procurement can use the system to promote products and services or specific suppliers to individual users. Reducing errors and maverick purchasing or focusing attention towards specific suppliers (perhaps for ethical, environmental or local supply reasons.)
Catalogue Managers can brand and configure catalogues and publish selected products and services to highly profiled individual users, locations, brands or territories resulting in greater adoption and fewer errors.
The Marketplace can also be used to improve margins. By capturing orders and aggregating demand across multiple users, multiple sites, multiple customers and if required multiple countries.
Suppliers can be set up to receive specific types of RFx’s and respond directly to these. Plus, each element of a specification can be captured within a project to allow for granular analysis of spend control.
Orchestrated and controlled Marketplaces offer many advantages:
- Supplier conformance to pre-negotiated commercial conditions, including pricing.
- Assurance of CSR responsibilities and any ethical or sustainable business choices.
- Consolidation of demand across the organisation. Opening order windows for specific items to ensure you achieve the maximum bulk discount.
- Control of last-minute purchasing activity – the cost of goods and delivery on these items.
- Ensure users are presented with relevant products and services.
- Support of local currencies, so it is clear to users what items cost.
- Elimination of time spent inputting data and time spent on repeat orders.
- Reduction in costs relating to input errors.
- Timesaving on supplier data exchanges.
- Improve the efficiency of the ordering procedures.
- Efficiencies associated with supplier management.
- Elimination of paper.
- Rapid approval processes.
- More effective monitoring of the purchasing process.
4Some process timings for overall eProcurement2
The following table highlights some of the timings associated with the procurement process and how automation can affect these. Use of your own orchestrated Marketplace will ensure that these savings are realised.
“The average procurement professional spends 58% of their time on non-strategic work.” Spend Matters
Send PO to Vendor
Match Invoice, Receipt, etc
Use of Marketplaces and catalogue interfaces for the most frequently purchased items impacts significantly on user productivity and Procurement’s involvement in transaction processing.
Adding RfX capability ensures that the user has total flexibility to purchase.
Employees can create their purchase orders drawn from Procurement orchestrated catalogues. Readily adopting the a process that they are very familiar with: Marketplace purchases.
Catalogues can also be dynamic; presenting only the items that the user needs to see – those items they regularly purchase. Plus, they allow the user to re-order of the same items without having to generate a new order form.
Controlled orchestrated Marketplaces engage with users, specific to their needs and requirements, yet at the same time, they ensure compliance to procurement policies of an organisation.
It is though very important, from a user adoption perspective, that Marketplaces support RFx functionality to allow users to make those non-standard purchases.
How easy would it be to create your own branded Marketplace and automate procurement for your entire organisation? Find out
Major brands are already using Claritum’s catalogue functionality to purchase goods and services. Including Coca Cola, Heineken, Easyjet and Canon.
2 https://www.oxfordcollegeofprocurementandsupply.com/the-benefits-of-e-procurement/ Although these figures are from 2014, they remain orders of magnitude correct.
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