The concept of procurement – from bid requests to sourcing materials and securing suppliers through purchase and delivery – has been around for centuries. Today, the often-overlooked department responsible for buying most everything companies need is taking on a more vital, strategic business role dictated by the economic uncertainty caused by the coronavirus pandemic.
Another problem stems from the estimated 7% annual increase in indirect spend over the past decade. As the use of software and services provided by external suppliers increases, so does more widely distributed – and often untracked – spending. To address this growing industry concern, procurement teams need the tools and strategies to track and manage spend across departments.
Over the past few years, CFOs have begun to view procurement teams as strategic partners that can move beyond filling orders and managing spend. In many organizations, they now provide an important business function and are responsible for driving savings, often working in conjunction with finance to ensure efficiencies and decrease risk.
Procurement teams are also faced with the challenge of maintaining effective processes in light of the recent dramatic shift to remote work. The physical redistribution of co-workers shook up existing processes, so procurement leaders had to find ways to provide the necessary tools to those redistributed workers while maintaining business efficiencies and compliance.
So how are companies meeting these new demands? “Having the right technology that allows users to keep processes running as they should safeguards outcomes and can even improve business efficiency – and that can include capital, time and resources,” said Teesta Kaur, enterprise procurement solutions at Zip. “That technology can change the process to meet current needs.”
Zip provides a software-based intake-to-procure solution that optimizes and simplifies procurement processes.
The evolving procurement process
One major change in today’s procurement process is the number of people and outside departments that can be involved. Stakeholders beyond procurement can include finance, security, IT and legal; requisitions can come from marketing, HR, creative, or any other team that need goods and services.
Most legacy systems were built for procurement and finance, so other users struggle unless they have time for training. The entire process can become overly cumbersome. “Learning the proper process can be challenging for non-procurement users, so any modern technology needs to provide a simple user experience and bring different teams together by using a company’s existing technology stack,” said Ed Sawma, vice president of Marketing at Zip. “To accomplish that,” he added, “technology solutions should offer multiple communication channels and integrations that do not require support from internal or external IT teams.”
The benefits of a modern procurement platform need to go beyond technology. They should allow users to set up – and modify in real time – approvals processes that pull various teams in at the best point in the lifecycle of a request.
“When legacy systems don’t communicate, the process can slow or even break down,” Teesta said. “We’ve seen companies struggle with surprise invoices, risk issues and security problems just because finance or legal weren’t brought in at the right stage.”
After revising their approach, Zip users report benefits including decreased cycle time per approver, increased spend tracked with purchase orders, better contract negotiation and more on-time renewals notifications.
Change management – the make or break
While adding a new technology solution sounds like the magic answer, having successful change management that results in high rates of adoption across an organization remains an issue.
“This is a very common theme, even at companies with well-established procurement departments. So many people are confused about how to engage with procurement and use unfriendly legacy systems,” Ed said. “And they are busy with their own jobs, so they circumvent the system rather than spend time learning another process — this breakdown leads to rogue spend.”
Changing people’s mindsets about procurement is as important as adopting new technology. Establishing procurement as a partner and single point of contact for other stakeholders across an organization can be a valuable component of successful change. And technology that integrates core systems can become that single entry point.
“Another benefit of having one entry point for requisitions is clean data,” Ed said. “Starting the process with a simple question-based form helps ensure the right information is provided and the right people are included in the process. It also saves procurement teams from spending time searching for missing information or correcting mistakes.”
The increased visibility that comes from streamlining and simplifying procurement processes improves many other business functions. Budgets are met, cash flow stabilizes, rogue spend decreases and vendor lists can be consolidated and optimized.
“And at scale,” Teesta added, “these things matter even more. It’s easy to manage 50 invoices a month, but it’s difficult to manage 5,000 each month. So that’s why the process needs to be built on clean data and visibility.”
Adaptability for future-proof processes
No matter what solution companies choose to streamline their procurement processes, it needs to be adaptable. Users need to be able to make changes as they uncover new needs without waiting days or weeks for a provider’s support team to answer their call for help.
“We have created a no-code platform, meaning approved users can customize or add workflows and intake forms or customize built-in templates. In addition to making it adaptable and user-friendly, we considered necessary business outcomes, so it saves time and money, while creating efficient processes,” Ed added.
Zip is seeing organizations use its software for more scenarios than anticipated. As a result, it has developed additional templated workflows that accommodate spend requests that do not require a purchase order. And internal requests can be set up for special orders or transfers across departments.
“Companies want something they can add on top of existing platforms and tools – they don’t necessarily want to overhaul everything,” Teesta said. “Any add-on procurement solution needs to be easy to use, configure and manage, but still provide the necessary robustness around compliance. And it has to be useful not just for procurement, but for the entire enterprise.”