Feb, 2023 - By CMI
Following the examples set by market-leading businesses is generally a sensible move for up-and-coming competitors, and that certainly applies in a procurement context.
There are plenty of tools that make life easier for the frontrunners, as well as best practices that set them apart from less disciplined rivals. But what are these elements, and how can they make a difference?
Arguably the most important element of any efficient procurement organization is the extent to which it is able to automate as many aspects of key processes as possible. Indeed the rise of automation is having a transformative impact everywhere its influence extends.
This is where systems and best practices align, since it’s sensible to be aiming to maximize automation, and modern software is the best way to go about this.
For example, with the latest purchase order management software, it’s possible to do everything from checking prices in real-time to juggling a multitude of orders from multiple suppliers without requiring extensive manual input from human team members. The same goes for monitoring and managing the entire technology stack in this context, as is achievable thanks to automation-enhanced tools like SolarWinds’ Observability.
Basically, leading procurement organizations recognize that sticking stubbornly to the old ways of doing things doesn’t make sense, nor does treading water even after you’ve embraced certain upgrades over time. You need to be looking for the next big thing and making operations and workflows lean and mean, with automation enabling this.
Poorly defined procurement processes are always going to be tough to stick to and tricky to explain to others in the organization. That’s why the biggest players get serious about setting out precisely what each involves, so that there’s no ambiguity, and no unexpected variations that could compromise efficiency.
Basically, there needs to be a blueprint for employees to follow so that confusion and delays are avoided. That means thorough documentation and a clear delineation of responsibilities for each stage of a process, potential pitfalls can be eliminated, even in remote working scenarios.
This must also go hand in hand with process transparency, which basically means that you should not obscure or obfuscate any steps from the stakeholders involved, whether deliberately or accidentally. If everyone knows what’s expected of them, and what their contribution must be, you’ll both improve accountability and lower costs as well.
Procurement organizations have to be able to predict the ebb and flow of supply and demand for the goods that they handle, and in the past it was hard to do this even with ample amounts of data available. Inevitably this led to additional costs, or missed sales opportunities.
Today, inventory management is being overhauled thanks to artificial intelligence and data analytics. Even smaller companies can now afford to optimize this aspect because of various tools which are capable of drawing valuable insights out of vast data sets.
By only having a single supplier for a particular product, you’re putting all your eggs in one basket and leaving your business at the mercy of a third party over which you have little control.
Thus a multi-supplier setup is preferred by many procurement organizations, ensuring that any bottlenecks that do arise can be dealt with swiftly, and any potential delays can be ironed out as a priority.
Each company involved in procurement has to adopt its own set of systems, standards, tactics and best practices, because approaches which work for some might not always be suitable elsewhere. That said, the tried and tested solutions of major operators aren’t to be overlooked, and can teach us much about how to tweak and improve our own processes.