It’s nearly 2020 and slow business processes just don’t cut it anymore. With political instability, uncertain economic circumstances, and rising competition, it’s critically important for businesses to unlock every possible source of value within their organisation. One of the areas ripe with opportunity for optimisation is procurement.
Traditionally, procurement might have been seen as a roadblock, as the group you engage only when absolutely necessary for fear of slowing down your project. Today, however, this outdated perception is being turned upside down by much-needed innovation in procurement processes and technology.
Here are five ways businesses are speeding up procurement processes to drive faster operations and hasten time-to-value across the entire enterprise.
1. Identify and prioritise the bottlenecks
If you don’t know where progress is slowing in your procurement process, it’ll be hard to understand where you should implement changes. Before you begin, first identify which changes will create the most impact. Are approvers dragging their feet? Are invoices sitting in inboxes? Check in with your team and your business to learn where the major problems lie.
Once you understand where processes are being held up, you can identify the costs (in time or money) of these delays and better prioritise the most pressing bottlenecks to tackle first.
2. Adopt a lean-agile procurement framework
A lean-agile procurement methodology is a collaborative approach that streamlines complex sourcing and procurement processes. It’s meant to reduce wasted time in the traditional procurement process, improve time-to-market, and consolidate the vendor evaluation process dramatically.
At the core of this framework is a simplified proposal structure that makes creating and comparing supplier proposals much faster. It involves comparing the needs, conditions, and alternative options of the business with the capabilities, value proposition, and cost structure of the vendor’s offering to see how they align. By standardising the evaluation criteria, the highest risks related to the vendor partner’s capabilities and cost structure rise to the top, allowing a much faster supplier evaluation and decision.
3. Empower your team
Often, procurement is one of the last departments to receive funding in fiscal planning, meaning procurement tool upgrades are typically kicked down the road. If you can demonstrate how much faster your team can do their jobs and how much more value they will generate with the right resources, you will be better prepared to make the case for investment in procurement technology.
Lengthy approval chains is another, often overlooked, area that slows down procurement processes. By streamlining approval chains, you can significantly cut down the time it takes to procure goods and services. Examples of automatic workflows include empowering employees to approve any purchase below $100 or sending any purchase request above $1 million straight to the CEO for approval.
4. Level-up your supplier engagement skills
Supplier behaviour can dramatically influence your procurement team’s speed of delivery. Engage your suppliers continuously to set expectations, provide or receive feedback, and invest in your relationship.
If you partner closely with your suppliers, there will be no surprises with transactions, policy updates, or other time-consuming issues. It goes without saying, but the cost of switching from an incumbent supplier can be enormous in time and resources. Regular check-ins with your vendors will make sure you are both on the same page and can keep doing business quickly.
5. Develop stronger stakeholder relationships
Your business stakeholders play a key role in your procurement processes. It’s essential to have strong relationships with them so you can align expectations with regard to procurement’s responsibilities and delivery speed. Schedule regular meetings with them and take the time to understand their worries, current pain points, and business plan. With this information, you can better anticipate their upcoming needs and serve them even faster.
If this sounds overwhelming, rest assured: optimising and speeding up your procurement processes doesn’t happen in a day, a fortnight, or even in a year. For most organisations, a procurement transformation is an ongoing, collaborative process. As you consider what this process will look like for your organisation, keep in mind the above tips as well as the context and culture of your business, and you’ll be well on your way to success.