Procurement activities vary greatly from one organization to another, depending on “how mature the organization” is. The more mature it is, the more strategic their actions are and the least they operate admin tasks. The journey to procurement maturity doesn’t happen just because the team grow “older” – it is the result of a culture of value creation, a culture where everyone is critical of their own- work and ask themselves: Am I adding the most value while performing this? How can I do better?
When I first started to work as a procurement practitioner, I was amazed to see that the team was still operating plenty of admin tasks: cutting the PO, sending them out to each supplier, chasing delivery issues and eventually solving invoice on-hold issues. The amount of time spent by me and the team was considerable, and eventually, we had to fall short on the projects that mattered and added real value. Our stakeholders were not convinced by our procurement value (sometimes referring to us as the “pen buyers”) when they had all those “important purchases” they had to make themselves.
Fortunately, our manager at the time understood this challenge very well and had us started on a hunt for low-value add, repetitive tasks**. She first asked us to identify these tasks and quantify the time it was taking.** With the groundwork analysis done, it was then easier to find solutions to the most time-consuming processes and build the business case to make the changes happen. And surely enough, we identified massive time wasters, such as creating and sending the daily POs manually, supporting low-value and non-recurring buys, and resolving invoicing issues. We then had for objective to either Eliminate, streamline or outsource them.
Find a way to eliminate these three processes alone, would let us save nearly one headcount (20% of the team at that time!) that could then be reallocated to more strategic actions such as tenders, risk management, improving the user experience etc… and gain the business trust!
To do this, we went through the three ways that a process adding little value can be dealt with :
- Eliminate : Sometimes, organisations are doing things because of historical reasons and no longer have any true use. Think of that report that nobody’s reading anymore but still takes you hours to come up with. A good way to eliminate processes is by completely automating them, learning RPA or just Excel VBA can be a wonderful asset for procurement to automate (eliminate) tasks.
- Streamline: If a process is important and cannot be eliminated, then the next best solution is to streamline it by removing unnecessary steps or part. Think of your process to buy tail spend (low value, non-recurring), can that process be simplified in terms of need identification, supplier identification and setup, PR to PO process? The best course of action here is to map out the current processes and work with your stakeholders to identify the best alternative. For instance, by working with my legal POC, I was able to streamline my contract approval process from 14 to 1 day by aligning expectations between legal, the business and my suppliers through a standard addendum. The gain in efficiency was massive.
- Outsource: Last but not least, ask yourself if you or your team is the best positioned to perform the task and if not, try to find a way to outsource it :
- Internally: In the case of invoicing issues, it is fairly clear that this task should be handle by account payable who has the tools and access to resolve this easily but often, procurement remains owner of the resolution. More generally, there are often tasks that should be reallocated to their legitimate owner to make them more efficient; find them and work with the business to transfer ownership. Document and work collaboratively, as these teams may well oppose this newly found ownership !
- Externally: Sometimes, the best solution is to outsource the task to a third party: whether a digital solution provider or consultancy that will handle it for you, or an incumbent suppliers that will go the extra mile to adapt their process to yours. These third parties can be a great source of value for you as they may have the tools and experience to deal with these tasks more efficiently than you. However, make sure that you don’t outsource a mess! Understanding and streamlining the process before is key to ensure the outsourcing will be successful. If you don’t know what and how you want it, there are little chances a third party will do it well for you.
After having eliminated, streamlined and outsourced our low-value tasks, the team was now able to focus on more strategic activities with more time and focus. The team went on to support their first European tenders and gain recognition from the business stakeholders who actually enjoyed working with to make their process more efficient!
And you, where are you in your procurement efficiency journey? Have you identified your top time waster or are you already moving on to streamlining them?
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