As we enter a new year, we are all experiencing a “bleak mid-winter” unlike any we have faced before, and it has left many organisations frozen in the headlights of commercial uncertainty. Hopefully, it has also made them consider whether their procurement process is fit for 2021.
As a species we draw comfort from the growing confidence of the new post vaccination commercial world.
A world already beginning to emerge and will continue to solidify over the coming year.
With this in mind, what are the proactive steps CFO’s and procurement professionals can take now to evolve their organisations to survive, compete and prosper as the market improves?
The post pandemic world
Covid-19 has accelerated the digitalisation of so many aspects of both our personal and commercial lives and Procurement now stands on the brink of becoming one of the greatest beneficiaries of the changes that have already taken place.
- Everyone is now comfortable buying online and fully understands all the benefits
- Most people would prefer to work from home at least one or two days a week (if not more)
- Time has become the most prized asset for individuals
- Managing costs and cashflow are now top of most business’s agenda
This is a people thing! Every business has the opportunity to quickly and easily evolve the way they work to take full advantage of this new world order.
In this article I will explain how every business can save everyone time, significantly reduce the costs of what you already buy, and address the needs of a “online” workforce whilst taking total control over all corporate spend.
Non-digital Procurement Process
Every business has struggled over the last year with manual purchasing and invoice approval processes being disrupted through working from home.
Whilst the immediate response has been to look at Accounts Payable automation applications, this is a sticky plaster over a tactical problem, not a strategic solution that re-defines the entire purchasing experience.
Looking at the Procurement function, there are three major roadblocks that inhibit the ability to identify and then deliver savings to the business.
The first is the lack of spend data.
Every spend review starts with the tedious work required to find out what the business is actually buying, who it is buying it from and how much was paid for it.
For most organisations, the only source of this data is on the supplier invoice, often tucked away in a filing cabinet.
This single problem makes it almost impossible to undertake a detailed procurement review of high volume, low value purchases of indirect spend to deliver savings – it would simply take too long.
The second roadblock is the fact that after doing the really hard yards to work through the spend review process to collate the spend data, undertake a tender and select the preferred supplier, it is almost impossible to get the business to then exclusively use that supplier to generate the savings.
The third challenge is the available procurement resources and associate spend category expertise necessary to deliver best value pricing across every aspect of corporate spend.
Until procurement can address these three roadblocks, the value that they deliver to the business will continue to be marginalized.
Digital Procurement Process
Today, unsurprisingly, the digital automation of the entire “procure to pay” (P2P) activity has become one of the hottest sectors globally, reflecting the need for every business to increase productivity, whilst reducing costs and manage their cashflow.
SaaS technologies and the associated applications have changed the procurement landscape and made P2P Automation not just affordable, but also incredibly fast to deploy.
When low cost and fast deployment are combined, the value proposition is not based on an ROI calculation to cover its costs, it is about making a strategic and sustainable contribution to corporate profitability, year on year.
How can you make those savings?
To solve the first challenge of spend data capture, imagine having real time access to the detailed spend data – every supplier, every invoice, every line-item code, description, unit of measure, quantity and price, simply by digitalising your supplier invoice capture processes.
Now add the capability of automated supplier category management, broken down by location, with instant drill down to the granulated line level spend data, including the tools to simplify and automate spend aggregation to deliver a tender.
Online tendering has never been easier, encouraging suppliers to respond and simplifying supplier selection to quantify the savings available.
The simple step of automating the invoice capture and approval processes opens the door to a digital procurement process and the substantial savings opportunities that it delivers.
To solve the second challenges of driving user adoption across the business, you have to make it much easier, faster and more convenient for everyone to buy from the preferred supplier.
The easiest way to achieve that objective is, wherever possible, simply enable everyone to buy online from the preferred supplier.
We have all fully adopted online buying through the pandemic, we all know the benefits, so there will be no push back.
Simply drive preferred supplier adoption by making it easier, faster, and more convenient from the preferred supplier – from any device.
Finance and procurement gain real time oversight and control over every purchase before the order is placed and the entire accounts payable process also becomes fully automated.
From the vendor’s perspective, it is the optimal sales process – a digital order delivered directly into their digital infrastructure to pick, ship, and bill, with the confidence that you will deliver the promised volume of spend to get the best value pricing.
Want to see how it's done? Check out our customer success story from the White Horse Federation here.
2021 – The world has gone digital
The strategic goal of any purchasing and Accounts Payable Automation project should be a single, simple, seamless, and fully digital procurement process to help everyone in the business save a huge amount of time to focus on what is most important to them AND deliver substantial and sustainable savings that grow over time.
Everyone outside finance will be delighted.
Their ability to generate requisitions from integrated online vendors is incredibly quick, easy, and convenient. They can track the approval process, see when the order is placed and the invoice is automatically digitally captured, matched to the order (and receipting) making invoice approvals so convenient.
Every aspect of the transaction can be undertaken from any device, at any time, from anywhere.
Finance gains the real time visibility and control over every purchase to manage costs and maximise cashflow.
The business saves money on what they already buy.
The only question is when will your business make the change; and how much time and money are you prepared to waste until you do?