Is your purchasing department equipped for the challenges coming its way? When the only constant is change, procurement teams must respond with flexibility and agility in the face of disruption.
Once viewed as a cost-cutting and transactional business unit, procurement is now considered one of the most strategic processes within an organization. Procurement identifies key areas of spend, qualifies suppliers in line with business goals, builds crucial relationships, and handles strategic negotiations. But that’s not all…
The new wave of procurement
According to KPMG, we’re experiencing a ‘new wave of procurement’. Unsurprisingly, procurement departments are considered the new guarantors of growth on a quest to:
- Increase collaboration with business units and suppliers
- Shift focus to sustainable value creation
- Optimize opportunities for the procurement function
That’s why the tools you use, the processes you implement, and the way you work with other business units are more important than ever. Thanks to the numerous e procurement projects we’ve supported so far, we have extensive insights into procurement issues. At Lemon Learning, we offer comprehensive support on a wide range of e procurement software, whether they’re cloud-based, SaaS or in-house. Including Coupa, SAP Ariba, Ivalua, Oracle, Sage, Infor, Synertrade, and ServiceNow.
We’re sharing our keys and tips to stay competitive in this new wave and improve your purchasing processes.
What are procurement challenges?
As a procurement leader, you face consistent challenges to streamline complex procurement and purchasing processes, all while achieving results, cutting costs, and saving time. Since the crisis accelerated digital transformation, it also emphasized the need to better leverage and adopt procurement technologies to address these challenges.
The main challenges facing procurement leaders:
- Ineffective, labor-intensive processes (despite investing in suitable purchasing tools)
- Lack of standardized processes
- Ineffective internal and external training
- Complex onboarding and support of occasional users
- Inconsistent procurement processes
- Difficult supplier management (identifying the right supplier, keeping track of vendor performance, ensuring a stable supply of quality products, monitoring supplier base)
Unaddressed, problems can escalate into costly losses, higher costs, and a direct impact on your ROI.
Inefficient procurement tools cost businesses in the United States and Canada $1.5B a year, equating to 32 million wasted employee hours.Source: Topline Strategy Group
The good news? There are keys, tips, and one particular digital adoption solution to overcome these procurement challenges.
8 ways to improve the procurement process
1. Invest in a digital adoption platform
There’s one platform to solve them all! A digital adoption platform (DAP) is specifically designed with your users and tools in mind. Thanks to step-by-step interactive walkthroughs, procurement teams (internal and external) can onboard, train, and work, all at the same time. Have you identified ineffective processes? Create and dispatch customizable guides for any procurement process. Are your users disengaged? With action-activated guides and a ‘learning by doing’ approach, you can rapidly improve their handling of tools. Expect more DAP insights sprinkled throughout the article.
2. Define strategic procurement policies
Each time you qualify a new supplier, it’s necessary to carry out long-winded security procedures. Now consider the world’s second-largest retailer with 2,800 worldwide suppliers. Building new relationships with each supplier is a painstaking task harboring multiple high-level risks, and mitigating these risks requires a lot of resources. Instead, mitigate from the start by defining supplier onboarding best practices.
Create a comprehensive process of steps to help you:
- Formalize planning of the entire process (standardize processes, track data, and supplier performance)
- Conduct due diligence (highlight supplier criteria, vet supplier history, contract management)
- Train and onboard suppliers (train suppliers on your platform, standardize onboarding, communicate consistently)
Conduct a new SWOT analysis of your environment and use the risks to modify any existing procurement policies. Working from existing policies will help you align your new ones with business needs.
3. Communicate with your teams
Communication is key! Consistent communication with your teams can contribute to sustainable success by guaranteeing all stakeholders are on the same page. Listen to your teams and suppliers to identify their pain points and inefficient procedures as they happen. For example, accidental orders or errors, or a lack of trust with certain suppliers – so it’s possible to deal with issues before they snowball. These relationships are mutually beneficial and require nurturing on a professional level. In the event of unforeseen disruption or conflict, your relationship could help minimize the impact on your supply chain or area of business.
🍋 Lemon Learning tip: with a digital adoption platform, you can send targeted push notifications in real-time, directly inside the procurement tool.
4. Manage inventory
Try to view your inventory as a part of your profitability. Effective inventory management means you don’t have too much or little inventory to meet demand at any given time. The most accurate way to manage inventory is to invest in inventory management tools. Select tools that are right for your business to help minimize human error: orders, stocks, raw materials, etc. Although it might seem wise to stock extra and exceed demand, it also means increased costs to stock them, trapping valuable cash flow.
🍋 Did you know? The 80/20 inventory rule states that 80% of your profits should come from 20% of your inventory.
5. Select the right digital procurement tool
Centralizing and standardizing information is one of the few simple ways to save your users time. In any position, locating and sending information can take precious minutes in a day, which equates to hours long term.
Employees spend 1.8 hours every day – 9.3 hours per week on average, searching and gathering information.Source: McKinsey
The same is relevant to procurement software. A centralized purchasing solution means your teams won’t have to juggle several tools at once, helping improve their overall productivity and attention.
6. Standardize processes
Standardized processes are also an invaluable way to save time and improve compliance. It’s a method of optimization that can be applied to all business units. Standardized processes can establish guidelines, and benchmark standards for an easier way to monitor outputs. In procurement, these common internal processes can significantly reduce human error (data entry, transactions, etc.). It’s also a good way to create a transparent and fair selection process for your suppliers.
🍋 A Lemon Learning tip: before standardizing your procurement process, find out where, and on what, your users spend most of their time.
7. Automate time-consuming processes
Procurement and additional automation software can seem costly and intimidating, but the reality is much simpler. As procurement professionals, leveraging automated assistance on your complex tasks can save you days over the course of one year.
51% of enterprises indicated that their top strategy was investing in technology that automated their procurement process. Enterprises reduced their requisition-to-order cost by 48% and cut transaction cycle time in half.Source: Aberdeen Group
8. Improve workforce training
Depending on the size of your organization, it can take between 30 days and even 6 months (for larger corporate companies) to onboard a new supplier into your procurement system. Unlike most other tools, purchasing software isn’t used on a day-to-day basis and should, therefore, require a more innovative training solution.
🍋 A Lemon Learning tip: you can integrate training directly into your purchasing tool, allowing users to ‘learn by doing’, each time they enter.
A digital adoption platform can train and onboard users independently, in real-time wherever they are, using interactive guides and 24/7 support.