YOUR 1ST RISKIN THE PROCUREMENT CYCLE
What is your 1st Risk in the Procurement Cycle?
by Salim Khalife, Founder & CEO
In the last post, I outlined some of the basic steps in the procurement process and identified the business risks associated with each step-with a promise to take deeper dive into each step in upcoming posts. The first step in any procurement process is when an employee recognizes the need for a particular product or service and creates a requisition. The business risk associated with this step is significant, and often underestimated: Inefficiency. Inefficiency is a hidden profit killer-in fact by some estimates, companies lose 20 to 30 percent in revenue each year due to inefficiencies. Below are three effective ways you can mitigate your first risk in the procurement cycle—inefficiencies in the procurement process—where a need is identified, and a requisition is created.
1. Place the tools where they’re needed
It’s no secret that your firm’s employees rely on their mobile devices, both in and out of the office. With that in mind, it only makes sense to put the functionality they need to do their jobs on those mobile devices. .
By empowering employees with the ability to create requisitions-both ad hoc and through your guided buying catalogs-from their mobile devices, they can accomplish these tasks on their schedule, whenever and wherever they happen to be working. n addition, mobile capabilities can enable authorized personnel to view and approve requisitions from their team, speeding the process and driving efficiency.
2. Incorporate Catalog & PunchOut capabilities
Guided Buying Catalogs and PunchOut are two different shopping capabilities that an advance procurement software can offer users. Guided buying catalogs are an excellent way to create customized collections of selected items, often at negotiated prices with suppliers, for your company’s employees to shop from. What’s compelling about this capability is it allows an organization to create catalogs for a specific department, programs, roles, and so on. This allows you to better guide and control shopping with a specific vendor. Rather than sending your employees to the supplier’s website to shop, keep them within your eProcurement software application.
PunchOut is a name given to the technical protocol that allows you to directly connect to suppliers’ product catalogs from your organization’s eProcurement application. If your supplier supports PunchOut, your company’s shoppers can browse and shop in real-time on a vendor’s website-from within your eProcurement application. Upon check out, just like in your own guided buying catalogs, your eProcurement software creates a requisition, ready for review and approval.
The beauty of this capability is it offers you and your team to have the same user experience that you would have on the supplier website because you are on the supplier own website, from within the software. Similar to the guided catalog capability, this means when you check out, the information goes directly into the requisition within the procurement software without having to re-enter data. Other advantages of using PunchOut are since you are shopping in real time, pricing and quantities are always up to date; you don’t have to maintain the information as you do with your own catalogs; and the requisitions are created automatically with no manual data entry. It adds up to better control, time savings, and overall efficiency.
3. Assemble guided buying catalogs
Your procurement department works hard to establish preferred supplier agreements offering the best terms and pricing, but these can be tested when someone in the organization needs to buy something. Guided buying catalogs are an easy and effective way to direct users to the right items, the right policies, and your preferred suppliers. .
Create catalogs by vendor, location, department, or even type of item (think Office Supplies) to make it simple for shoppers to locate the items they’re looking for. Shoppers place items in their virtual shopping carts and upon check out, a requisition is created. In addition to catalogs, many eProcurement solutions also provide the ability to save “shopping lists” made up of frequently purchased items, further streamlining the shopping task. By limiting the purchase of many routine items to your preferred list of vendors and products, you can reign in maverick spending and reduce the need for procurement department involvement-both of which promote efficiency right from the start.
Like virtually every other vital business function, the procurement cycle benefits from a strong process framework, enabled by technology. EProcurement solutions provide that technology framework, building efficiencies throughout the procurement cycle, starting with the very first step. Stay tuned for the next post in this series, as we continue to walk you through the steps of the procurement cycle, highlighting each stage, and uncovering ways you can maximize the value it offers you and your organization.
About the author:
Salim Khalife is the founder, president and CEO of Paramount WorkPlace, a technology company that develops, sells, and supports advanced web-based and mobile requisition, procurement, and expense software solutions for mid-market organizations. The company introduced its first cloud-based SaaS requisition application in 1997, and continues to innovate and expand its partnerships and integrations ever since. Learn more at www.paramountworkplace.com.