Take these seven steps and you’ll be well on your way to procurement visibility and managing spend as effectively as you possibly can
The more visibility and efficiency built into your organization’s procurement strategy, the more effective your company will become. That’s because visibility enables organizations to save a lot of the time previously used to discuss the status of each contract. Instead of stakeholders having to track down managers to find out how far along certain contracts are, that information becomes readily available in a central repository accessible to every member of the team. This streamlined approach enables each employee involved in the process to reclaim a good chunk of time they can then invest in other pressing matters. It also allows stakeholders to easily determine which other employees in different departments are working on the same projects—which should provide even more efficiencies.
Additionally, a transparent procurement process gives organizations more insight into their budgets. With more information at their disposal, companies can then make better-informed decisions with confidence. But how exactly can a company increase visibility in their procurement process? These six steps should get you moving in the right direction.
1. Vendor management
You rely on vendors and suppliers to provide the materials and services you need to take your business to the next level. But just because you’re the one who’s cutting checks doesn’t mean you have to blindly accept every vendor’s terms.
By making vendor management a top priority, you can optimize your procurement process while reducing risks. For example, if a certain supplier has been late with a number of shipments, you are probably better off looking for another option. The better the relationships you establish and maintain with vendors, the more likely you’ll be to negotiate better deals—and ultimately pad your bottom line.
2. Stop using paper orders
Many companies have migrated their business processes to the digital world. However, some are still using outdated methodologies to meet their needs. If you’re one of the companies that still relies on paper orders and manual entries for procurement, update your process as soon as you can. That way, you won’t have to scramble to find the purchase order you misplaced, for example. And instead of having to physically deliver a piece of paper to another department, you can send it electronically, thereby saving time while reducing the likelihood anything goes missing.
3. Manage orders electronically with a complete audit trail
Once you’ve abandoned a paper-based process, you can leverage a new e-procurement system that enables you to easily monitor the status of orders. The best systems feature three-way matching functionality that enables you to quickly determine whether invoices you receive match both purchase orders and your customers’ receipts. Three-way matching gives accounting and procurement the peace of mind that comes with knowing an order is completed and that everything arrived on schedule and as advertised. In the case of an audit, your teams will be prepared with easily accessible and accurate records that all match.
4. Hire the right people
Efficiency starts with having the right people in place. The more talented your team is, the easier it will be to optimize your procurement process. As companies increasingly understand the cost-savings and opportunities a visible procurement process can have, the war for talent is heating up. To this end, organizations are adding data scientists, data analysts, and financial analysts to their procurement teams. These folks can help you get your data house in order by optimizing and organizing the information you have (both structured and unstructured data sets). Once that’s done, they can study your data and use predictive analytics to understand it fully and make informed decisions about the future, thus building more efficiency into your procurement process.
5. Invest in training and support
Adding the brightest minds to your team is a great start. But that by itself won’t take you where you want your organization to be. You need to train every member of your procurement team to make sure they are familiar with the latest tools and technologies and have the skills necessary to thrive in their roles. Since technology evolves and industries change, make training investments on a recurring basis. With the right tools and the proper knowledge of how to use them, your team becomes that much more efficient and effective.
6. Collaborate across the organization
Two minds are better than one. And three are even better. This is why businesses are increasingly prioritizing collaboration across the entire organization. The more stakeholders involved in shaping your procurement process, the more likely your organization will be to develop the most efficient one. Managers should encourage their teams to share their ideas and raise their concerns on a regular basis. That way, the moment someone figures out a better way to do things, you can improve your process right away.
Procurement success means business success
While revamping the procurement process to increase visibility and efficiency may take some time, make these six suggestions top priorities for your department. That’s the ticket to reaching your full potential as a team, adding value to the organization, and making a direct impact on your company’s bottom line.