A real Digital Procurement Strategy can only be implemented by a big company, right? – Wrong
The problem with “procurement” is the common belief that a business has to be of a size where the savings potential available will, as a minimum, cover the costs of hiring the procurement resources necessary to achieve those savings.
But the challenge is usually the level of confidence on whether the savings are even really there, whether a procurement hire will be able to find them &, as important, deliver them, the cashflow costs from the hire to the return on investment…. the list goes on.
It Is A Classic Catch 22.
Do the risk & initial costs of trying to make savings justify the potential return? Much easier to do nothing!
Instigating a successful Digital Procurement Strategy is about taking a totally different approach.
Every Digital Procurement Strategy starts by automating your accounts payable process.
This single & simple step enables the digital capture of every invoice processed: every supplier, invoice & most importantly, every invoice line item, including the vendor’s item code, description, unit of measure, quantity & price.
This data is vital because every procurement spend review requires this level of spend analysis to quantify the savings available.
The automation of the capture of detailed spend analysis removes the single largest barrier to identifying & delivering savings & opens the door to Saving as a Service.
Savings As A Service
Spend Optimization organizations now have instant access to all of the information they need to quantify the likely savings available & decide whether those potential savings justify them engaging with your business.
The common sales approach of these procurement professionals is to provide their services free of charge up until the moment they can quantify the savings.
Having instant access to the digital spend analytics not only reduces the time they require for the savings analysis it also ensures that the savings potential identified are credible, accessible, & achievable.
From your perspective, Digital Procurement means that to quantify the savings potential, you have done almost no work, incurred no costs, & at no risk.
So far, so good.
At this point, you agree to the “share of savings” percentage fee with the spend optimization provider, pull the trigger, & leave it to them to continue the process.
The next step for the Procurement professional is to generate & execute the tender process (again, this is digital to make this entire process as simple as possible), which quantifies the savings & then selects the preferred supplier.
Preferred Supplier Adoption
The next problem is how you get all of your staff to then buy from the preferred supplier to deliver those savings.
Again, Digital Procurement comes to the rescue.
The most effective way to drive user adoption of preferred suppliers is to enable them to buy online from that supplier at lower prices as part of your Accounts Payable Automation process.
For the users, the experience could not be easier.
They select the supplier & “punch out” automatically to the website, fill their basket & with one click, create a “requisition” with the application.
The requisition goes through the appropriate digital approval process & final approval is sent to the vendor for delivery.
It Gets Better
The vendor then sends a digital invoice, which is automatically matched to the order (& receipt if required) & automatically sends to the approver to confirm delivery & on final approval is posted to your existing accounting / ERP software.
Everyone loves buying online – it is simple, fast & convenient & that drives adoption, which in turn delivers savings.
The more they buy from the preferred supplier, the more you save.
Finance Also Benefits
They get total oversight & control over every purchase before it is made & will also save between 65% & 90% of the time they would have spent on any manual Accounts Payable process.
Rinse & Repeat
Having proven the value & savings achieved through the first project, move straight onto the next category of spend & repeat.
Each project delivers quantifiable & sustainable savings year on year, which adds up to make a strategic difference to both cash flow & profitability – or simply achieve more with the available funds.
A Digital Procurement Strategy Is About Enabling Every Business To Cut Their Costs, With Minimal Time Investment, Cost & Almost Zero Risk
So Why Wouldn’t You?