March 03, 2020

Procurement - A useful excuse for failure?

by Procurement Trends, Source-to-Pay, Sourcing, E-procurement

Do you know how much effort and money your company is leaking when procurement processes are not properly digitized?

Procurement - A useful excuse for failure?

Why don’t companies understand the value of up-to-date, end-to-end or integrated IT-systems enabling e.g. control (at the beginning of the process), transparency, efficiency, and information sharing - especially in procurement? It blows my mind that such a key business driver to overall success can be ignored and/or minimized as it so often is.

"Tools aren’t the solution" is an answer heard way too many times to any development proposals. Partially understandable, but I’d like to hear one good explanation why on earth supplier management, tendering, contract management, reporting, and analysis are still mainly done via emails (incl. word, excel, ppt and/or pdf files) when the return on investment of related IT-solutions are so rapid and demonstrable? Is it because it’s so challenging to concretize, measure and follow-up? Well, the benefits are real anyways, measurable or not. The level of measurability depends entirely on the organization’s process maturity and their ability to tag and track expenditure during the development activities (just like you would track costs against any supplier, category or other cost items).

"This is how we’ve always done this" is another answer heard way too many times when some development has been proposed. Well, yes, it may work like that, but what if all of it could be done even better and more efficiently e.g. by consolidating the supplier base with basic spend analysis or by or reducing inventory through improved forecasting? How about finding potential suppliers according to the needs in question, evaluating supplier performance and price variation? How do you do this effectively and efficiently without a system? The answer is - you don’t do it effectively or efficiently. Immature procurement processes typically force you to pay a premium (over better run procurement departments) and take more time from your key people.

How can any organization decline or delay such development? Is it due to change resistance? Developing requires change and consistent effort of the people involved. Everyone wants change, no one wants to change. Why should I change the ways I work? Because you work for a company, not for yourself, unless you’re an entrepreneur. The company, to be as successful as possible, needs to ensure that the same/similar things are done in systematized ways to ensure control, efficiency, reusability, and reliability of e.g. data. Or due to lack of feeling the pain of non-supporting IT-systems? Everyone working in procurement feels the pain described here, but do the leaders feel the pain? The requested reports, analyses, tenders, and contracts will anyways be delivered. Perhaps this lack of efficiency is a useful excuse to explain other failures?

For years I’ve wondered why there is so little done to develop and unify the system landscape in procurement when in sales it seems to be totally different. One of the reasons I decided to join sales for a procurement solution provider was the opportunity to be able to support more organizations to digitize their procurement-related processes.

The journey needs to be started somewhere. It most probably won’t be perfect at first try, but it’ll never improve if it’s not improved.

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Miia Lönnqvist

Miia Lönnqvist
Sales Executive (ITIL), OpusCapita

Miia has 20 years of experience in purchasing, sourcing and related development activities in various corporations. During this time, she's been responsible for direct- and indirect business areas, related to services and materials (e.g. IT Consultancy HW, SW & development and Marketing & Communications). Since spring 2019 she’s been responsible for selling OpusCapita’s Source-to-Pay -solution to major clients.

Read more blog posts about E-procurement