As we enter a new year, we are all experiencing a “bleak mid-winter” unlike any we have faced before, & it has left many organizations 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 & will continue to solidify over the coming year.
With this in mind, what are the proactive steps CFO’s & procurement professionals can take now to evolve their organizations to survive, compete & prosper as the market improves?
The Post-Pandemic world
COVID-19 has accelerated the digitalization of so many aspects of both our personal & commercial lives & 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 & 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 & cashflow are now top of most business’s agenda
This is a people thing! Every business has the opportunity to quickly & 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, & address the needs of an “online” workforce while taking total control over all corporate spending.
Non-Digital Procurement Process
Every business has struggled over the last year with manual purchasing & invoice approval processes being disrupted through working from home.
While 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 redefines the entire purchasing experience.
Looking at the Procurement function, three major roadblocks inhibit the ability to identify & 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, & how much was paid.
For most organizations, 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 that after doing the tough yards to work through the spend review process to collate the spend data, undertake a tender, & select the preferred supplier, it is almost impossible to get the business to use that supplier to generate the savings exclusively.
The third challenge is the available procurement resources & associate spends category expertise necessary to deliver the best value pricing across every aspect of corporate spend.
Until procurement can address these three roadblocks, the value 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 while reducing costs & manage their cashflow.
SaaS technologies & the associated applications have changed the procurement landscape & made P2P Automation not just affordable but also incredibly fast to deploy.
When low cost & fast deployment are combined, the value proposition is not based on an ROI calculation to cover its costs; it is about making a strategic & sustainable contribution to corporate profitability yearly.
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, & price, simply by digitalizing 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 & automate spend aggregation to deliver a tender.
Online tendering has never been easier, encouraging suppliers to respond & simplifying supplier selection to quantify the savings available.
The simple step of automating the invoice capture & approval processes opens the door to a digital procurement process & the substantial savings opportunities it delivers.
To solve the second challenge of driving user adoption across the business, you have to make it much easier, faster & more convenient for everyone to buy from the preferred supplier.
The easiest way to achieve that objective is, wherever possible, to 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, & more convenient from the preferred supplier – from any device.
Finance & procurement gain real-time oversight & control over every purchase before the order is placed & 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, & 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 & Accounts Payable Automation project should be a single, simple, seamless, & fully digital procurement process to help everyone in the business save a huge amount of time from focusing on what is most important to them & deliver substantial & 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, & convenient. They can track the approval process, see when the order is placed & the invoice is automatically digitally captured, matched to the order (& receipting), making invoice approvals so convenient.
Every aspect of the transaction can be undertaken from any device, at any time, from anywhere.
Finance gains real-time visibility & control over every purchase to manage costs & maximize cash flow.
The business saves money on what they already buy.
The only question is when will your business make the change, & how much time & money are you prepared to waste until you do?