As a leader in operational procurement, you probably aren't alone if you've run into challenges in the past with achieving your savings targets. While your targets for potential savings are clear with the right supplies being ordered from the right vendors in the right amounts, sourcing teams are making purchases separate from pre-negotiated contracts and are paying higher prices as a result. Unfortunately, failure to pinpoint and address these issues can not only impact your organization's goals for the fiscal year, but they may also have long-standing impacts on company profits.
Therefore, businesses must learn how to manage a successful operational procurement process, considering factors such as material availability, good communication, supplier-relationship management, and order quantity optimization across all departments.
Equipped with the right tools, your team will be in a unique position to address these concerns. Here is a guide for problem diagnosis within your procurement system, with considerations and a solution to achieve cost savings with a consolidated vendor portal that gives users a single view into cost savings.
Problem Identification: Where Business Rules Are Being Lost
One of the most common reasons why plans fall off track comes down to governance. Even with the best processes documented, if teams find them difficult and deviate from the set of business rules you defined, your processes are little more than words on paper. To ensure sourcing teams are purchasing the right items from the right suppliers, rather than incurring spot quotes, your job as a leader comes down to making this process easy to follow.
Today, ERP systems are set up with some best practice business processes, although industry experts will often recommend keeping this backend fairly clean and building on any additional customizations with offerings like SAP Business Technology Platform. Each business rule should consider why and how an activity is performed, and the support embedded for the user to follow a given activity. While improvements can be seen on a task-by-task basis, the realization of major changes in the organization will come down to how an activity behaves as a part of the overall process. With the right considerations behind these business rules, systems can facilitate and automate the completion of certain tasks and reduce the overall process effort.
To diagnose this as a concern, businesses are required to identify the gaps that exist between documented processes and what their team is currently doing on a day-to-day basis. This can be done the most simply with our BPI-based offerings that show what really happens in an organization. In the presence of gaps, businesses can quickly determine the processes are not easy enough for employees to follow, allowing them to stray away from defined business rules towards off-contract spending. Fortunately, leaders can address these concerns by adding functionality that simplifies the traditional ERP interface.
Considerations: Maintaining Auditability
When determining a solution, the next consideration comes down to your team's ability to audit. Following the procurement process is important for ensuring budgets stay on track and for avoiding the risk of fraud. An audit trail becomes essential as your organization's finances and assets require a record for each operation, procedure, or purchasing event (which may include at least one document for each of the seven stages of the procurement process).
When teams deviate from documented procurement processes, non-PO (purchase order) invoices become more apparent, making it difficult to trace back the paper trail or verify where purchases are coming from. Since procurement processes must occur in order, audits can be more easily done with an end-to-end solution and are typically more complex when steps are being completed in isolation. The integration allows source documents (purchase orders, goods receipts, or invoices) to be connected and cross-checked automatically, reducing the room for human error in the process.
As an added reason to consider the ability to audit, auditors that can easily surface the right documentation can spend less time and resources on your audit by simplifying financial records, thereby reducing your expenses and freeing your team to refocus on high-value activities more quickly.
Solution for Easy Adoption: ConvergentIS Rapid Vendor Portal
Now that you've diagnosed the problem within your current procurement processes and made appropriate considerations, everything comes down to the implementation of an end-to-end process solution. Our proposition is to bring purchasing, receiving, invoicing, and managing inventory for goods and services together into a single, streamlined workflow. The Rapid Vendor Portal is a collaborative portal environment that surfaces all relevant data based on a team member’s role, making it easy to use from the perspective of your procurement team. By making these processes so simple to use, team members have little inclination to seek workarounds or execute spot quotes. This is because the vendor portal is based on the latest Fiori, Fiori mobile, and simple guided processes which improve the overall experience by gently guiding users through complex procurement practices.
Since the rules are baked into the processes themselves, operational leaders can have full confidence that plans to achieve cost savings will be followed. Additionally, all information is stored in a single location – as a "one-stop-shop" for audibility. This is simply the first step in going fully digital and increasing the efficiency of procurement processes including maximizing the number of invoices per AP FTE and decreasing the cost per invoice.
By using these procurement bundles, businesses can produce significant savings on their total annual purchasing spend. Learn what this means for your business by downloading the white paper below.