The role of Procurement is on the rise, and has been for some time. CIPS (Chartered Institute for Procurement & Supply) estimate there are now 55%-65% more people identified as ‘top talent’ in procurement roles now than in 2008. At Touchstone Spend Management, we very quickly realised if procurement was to move away from its roots as a functional buying department to become a fully-fledged strategic function at the top table, this new wave of savvy procurement professionals needed to be armed with savvy procurement tools.
At Touchstone Spend Management we use technology to enable good decision making. Give the right person, the right information, at the right time – you get good decisions.
The Source to Contract suite implemented by Touchstone Spend Management’s CIPS trained consultants arms procurement professionals with the information they need to make good decisions. Modules can be used independently, together as a Procurement suite and in conjunction with P2P for full spend management.
The base point for every best in class procurement function is knowing who your suppliers are and what they do. A sales department would consider it unthinkable to not know who their customers were, when to contact them, who to contact and what products would offer the most value. Unfortunately we still see so many procurement functions who do not know their suppliers well enough. They are hamstrung either by inadequate excel-based tools, a reliance on Sharepoint or overly complex add-ons to ERP solutions which do not provide quick and easy access to the requisite information.
Procurement teams are also faced with inefficient and time-consuming manual tasks such as updating existing supplier records, uploading new suppliers and collating spreadsheets for questionnaire responses. Team members performing these tasks are often over-qualified for these assignments, and could be spending their time on alternative value-generating activities.
All of this manifests itself in poorly negotiated agreements and lost opportunities. While organisations are also exposed the to risks of poor performance, supplier bankruptcy and working with suppliers who do not adhere to supply chain legislature like the Modern Slavery Act (2015).
The best way to combat these problems is by empowering your team through deploying an easy-to-use, nimble, cloud-based solution. Inherent within any solution you choose should be a central supplier directory which gives your procurement team access to all supplier information in one place – ensuring you truly ‘know your supplier’.
Improved supplier collaboration should be ensured via access to a Cloud-based supplier portal. Here the onus is placed on suppliers to keep their details and records up-to-date. This not only ensures suppliers are categorised correctly and notified of the opportunities relevant to them, but frees procurement teams up from manual data entry tasks and means they can spend more time doing what they do best – finding the most suitable suppliers and negotiating great deals for their organisation.
These successes not only enhance the day-to-day running of the procurement function, but enhance an organisation’s reputation as a buyer – transforming the procurement function from a cost-centre to a value-adding leader which transcends the organisation.
For a sourcing event to work, it needs to have clearly defined goals, which are transparent and followed diligently and punctually by every person who is part of the process. We find organisations are only too aware of the savings running more sourcing can bring to certain categories, but never have the opportunity to realise these savings due to flawed manually-intensive processes, with Procurement struggling to allocate the administrative manpower to cover requisite categories.
As a result, organisations will run events which are not effective, predictable or in compliance with regulatory standards. As a consequence organisations will limit the number, scope and duration of their Sourcing projects, costing themselves huge savings due to lack of resources. Worse still, the lack of a concrete process can make it impossible to verify the value of savings made from running an event, if any at all.
We often see what is a complicated process be further complicated by an unnecessary reliance on manual process – the process needs simplification not complication. In our experience the best way to harness the experience of your procurement team is to channel that knowledge into a personalised, easy-to-assemble series of questionnaires and templates to create and manage regular sourcing events.
Switching to an automated solution has helped a variety of organisations from local charities to multi-national financial institutions reduce the manual effort required in the sourcing process. We estimate a reduction of between 80%-90% in manual effort, which leads to a saving of 40-60% across a sourcing events timeline. This gives experienced buyers the opportunity to run more events and, ultimately, deliver more savings. A robust Sourcing solution enables short, sharp and consistent sourcing events. The solution is functionally rich, comprising of automated alerts and scoring, as well as workflow which promotes collaborative project reviews. The inherent eAuctions functionality is highly flexible, supporting many formats including Reverse, Japanese and Dutch enabling organisations to achieve huge price reductions across a multitude of categories.
You’ve found the right supplier, they’ve passed all your due diligence during the onboarding checks, they have proven themselves consistently throughout your sourcing process and you have awarded a contract which has been fairly negotiated and provides value for all parties – so far, so good.
However, there are a number of issues remaining. First of all, a contract is of little value if people in the business aren’t directed to use it. Too often we see organisations with well negotiated contracts locked away in Sharepoint, Dropbox, Excel or even physical filing cabinets, making them completely unsearchable for procurement and legal teams. Good contract management cannot be accomplished using Sharepoint or Dropbox, it takes more than that. Organisations who adopt these approaches only increase administrative burden, cause savings opportunities to go unrealised and open themselves up to compliance risks. On top of this, the lack of a clear process and alerts for monitoring key contract events exposes organisations to unwanted auto-renewals and missed termination dates, often facilitating huge financial losses.
The problem of a lack of visibility extends to the wider organisation where agreed contracts are not presented to users of purchase-to-pay at time of purchase, meaning potentially more maverick spend and lost savings opportunities.
In our experience, the first step for a buying organisation to deal with these contract issues sounds so simple and yet so few organisations deal with it. To us, the most efficient way of doing this is to make all your contract data and physical documents visible in a single web-based contracts repository. For many organisations, simply knowing how many contracts they have, who those are with, what they are worth and the framework and terms of the agreement is an enormous leap forward itself. From this starting point, a first class contract management tool will make this information accessible, present it in dashboards and ensure it is used to improve negotiating positions, reduce risks of poor supplier performance and ultimately, empower organisations to make smarter decisions.
Organisations using contract management will reap the benefits of robust search functionality, and proactive renewal management by making use of automated alerts to safeguard against the possibility of missed review or renewal deadlines, and protecting the organisation from the risk of contracts with unfavourable terms or with out of favour suppliers rolling over.
Engaging effectively with suppliers is essential but often a buying organisation can become overwhelmed by the sheer number of interactions with all their suppliers, including keeping supplier profiles and catalogues up to date, requesting quotes, issuing tender documents, handling PO and invoice transactions, monitoring contract dates and terms and answering questions about payment status.
Adding to the volume of interactions is the variety of ways you are expected to communicate with suppliers including post, email, phone calls, with some contact in a more conversational style but other occasions calling for formal questionnaires and public tenders.
All of which is time consuming and steals time away from a procurement officer’s ability to review pricing, seek proposals and negotiate agreements, the very things they are judged by and that the business sees as the prime source of value generation.
The options to deal with this all seem either unrealistic or unlikely; hire more people, work longer hours or become faster at re-keying information, all while somehow managing and rationalising the number of suppliers without knowing enough about them.
A Supplier Portal connects you and your suppliers in the most efficient way possible at every important touch-point as you do business together. It provides essential support to all Source-to-Contract and Purchase-to-Pay applications and can connect in similar ways with other existing systems.
The web-based portal allows for suppliers to create and maintain their records on your behalf, receive notifications including requests for quote or tender, participate in auctions, administer their documents and contracts, and trade via electronic Purchase Orders and Invoices.
Cumbersome manual communications and transactions are replaced by quick, low cost electronic methods that deliver accurate information from a single viewpoint. The Supplier Portal becomes the ideal ‘one-stop’ collaboration channel that serves your buyers and suppliers alike, sharing key information and transactions in the most efficient way.
