In the last 20 years, technology has been a major driving force for innovations. This enables cost-savings, efficient workflows, driving large shareholder value and strategic business advantages.
Unfortunately, in the procurement process, technology adoption has not been the same as expected. Its efficiencies in this process are lower than in other areas. Due to the imbalance between speed and control, the corresponding procurement process and enterprise procurement technology have become complex.
As a result, product development support has become a considerable component of complete revenues. Everest group in their latest white paper, “Procurement Transformation – Driving Performance & Results Beyond the Limits of Leverage” said that on an average out of total incurred expenses, procurement accounts for 30-50%, for a standard billion dollar organization.
Multiple layers of complex workflows and their approvals overlap in the value stream. This has led to crisscross among work procedures. Lack of transparency, communication problems, and sub-optimal business processes have resulted in a lack of innovation, misalignment of objectives and making of an onerous bureaucracy.
The problems that were expected to get resolved by the procurement technology have actually increased and has made the adoption of this technology haphazard.
So, what can be a possible solution? How can the leaders of enterprise procurement achieve these proficiencies?
Introduction of procurement as a service
The highly successful strategies are the most straightforward and always the simplest. One possible solution for this can be to accept the “as a service” concept. A combination of cloud-based processes, technologies, and services, can be used to streamline the processes by the procurement function as a platform.
Such an approach can help in solving the confusion around the procurement process by reducing complexities and adopting consistent and simple approaches. In order to reach wider adoption, the approach of “as a service” seem right at this time.
Out of the total, chief procurement officers who were surveyed, 53% have planned to spend on procurement technology and a growing number of organizations will use cloud solutions. The mindful use of cloud-based tech solutions along with pre-determined processes that are based on tried and tested practices.
This can help in finding out something meaningful out of all the confusion. A good procurement as a services solution includes:
- Technology that can automate repetitive processes
- A detailed analysis of expenditure to discover the areas in need of improvement
- Improve the areas discovered in analysis with innovative
The chief components of global procurement services
Contract lifecycle management
With this application, you can use digital forms for different types of contracts to build boilerplates. The negotiation process can also be simplified by allowing virtual redline versions.
Vendor e-sourcing and management
Basic understanding of your prevailing supply base via vendor management is the beginning of procurement services. This helps in minimizing the errors in the buy-to-pay transaction and maintaining vendor relationships like that of a parent-child.
Spend Analytics is achieved by collecting data from disparate systems. After checking the data quality, custom business rules are determined to assist in the review process before taking a decision.
It is important to understand the vendor segmentation, spend categories, pay term analysis, part analysis and to check expenditure under contract.
Risk, cost and performance review
You can perform risk, cost and performance review on your expenses by using data science technologies. According to the nature of risks, vendor risks are classified into sole vendors, vendors impacted by market factors and vendors in volatile geographical areas.
The performance of vendors is classified by analyzing performance against promises and needs, on time delivery.
Reporting visualization and dashboards tools
In the final stage, provide your employees with reporting visualization and dashboard tools. This will help them in identifying opportunities for the next procurement innovations.
From the last quarter of a century, technology has become a great efficiency enabler for companies. It helps the companies in making remarkable progress on the marketing, and sales front. But until now procurement outsourcing has only increased the problems and led to a disjointed system with inefficiencies.
Global procurement services are providing the solution to problems by integrating intelligently managed processes with cloud-based technology to enable e-sourcing, manage vendors, analyze the expenditure, review cost, manage contract lifecycle and review the performance as well as the risks.