Increasing Procurement Effectiveness Through Digital Transformation

Speaking with members of my network I hear many similar stories. Organisations are looking to Procurement teams to deliver more, both in terms of bottom line savings but increasingly top line growth through marketplace innovation. Often, this is without any additional investment in resource – teams are expected to do more for less.

There are a number of answers of how to address this challenge. Firstly, attracting, developing and retaining excellent procurement talent is vital to delivering increased value to an organisation. Secondly, excellent relationship management of key stakeholders and suppliers ensures execution of the strategy. However, my focus for this post is Digital Transformation. Increasingly procurement is joining many other business disciplines embarking on Digital Transformation to remove the burden of legacy processes and admin to focus on more strategic work.

Are you and your team ready for Digital Transformation?

Is your reporting or spend data available at your fingertips whenever you need it? Do you have an agile tender process that requires minimal input and allows decision making at business-speed? Do you have a way of easily and conveniently managing your project admin in real time?

If the answer to any of those is ‘no’ then you are not alone. There are many products and techniques that teams can use to digitise processes and easy steps that you can implement to transform your procurement team and processes. But for now we need to look at developing the strategy – step one is:

Step One: Define the problem:

At this stage, it really is about mapping all areas of your procurement process. There are no right or wrong answers. If you keep things objective and remain open to all feedback, then you will be amazed at just how many great ideas you will come up with if you give it a chance.

Firstly, let’s pick an area of your procurement process to focus on. It could be the RFP process, data management, procure to pay, negotiation, contract implementation etc.

Once you have an area identified then you need to work out which members of the company are best placed to help work on it. For example, if you selected contract implementation, it would make sense to include Legal and Accounts Payable.

Ideally you would get this team together for a day long workshop. Regardless of how long you are actually able to get the team together for, this is invaluable. During this session, get all team to detail their pain points in the process.

A power technique to find the root cause of an issue is the ‘Why’ technique. Also known as the ‘5 Whys’, it is an interrogative technique used to explore the cause-and-effect relationship underlying a particular problem. The primary goal of the technique is to determine the root cause of an issue by repeating the question “Why?”. Each answer forms the basis of the next question.

This should naturally lead you to a problem statement. An example could be ‘Due to a poor supplier onboarding process, key details of the contract are lost and supplier details are being mistakenly uploaded. These errors cause missed savings opportunities and suppliers not being paid on time leading to frustration and additional wasted time’.

The first stage is complete. Now that you have identified a problem, it is time to determine how best to improve this process and successfully implement your digital strategy.

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