How Much is Your Current Procurement System Costing Your Company?

How Much is Your Current Procurement System Costing Your Company?

Understanding how much your current procurement system is costing your company is critical information, especially if you are considering a change.

The answer may be significantly different if you are using a spreadsheet-based process versus cloud-based software or an inhouse system.

Can I admit that I have used the wrong approach with some prospective clients?

Yes, I can.

In the past I often focused on the savings of time, effort and cost our tools typically provide.

Most people won’t believe it because that isn’t their reality. Telling someone that your system will save them 25% of the time needed to run an event doesn’t work.

They can probably imagine saving some time but 25% is just not believable. This is true even if they speak to your references.

You might as well tell them that you won the lottery twice but really like your job, so you keep working.

What they will understand is how much it is costing them because they live that every day.

People are much more likely to consider a change if it will reduce their pain. Pain is a much stronger motivator than pleasure.

I have also found that most procurement professionals are ready and willing to talk about the frustrations they face, especially if there is a chance that you can fix some of them.

Creating and executing an event in Excel will typically take a sizable chunk of time, even if you are working from the file used in past events.

Modifications are a given when you are creating a new event. Understanding what you did or what someone else did with complex formulas and analysis can be daunting.

What if the person has left the company? Starting from scratch will definitely cost you some nights and weekends.

There are many other time hogs that could be listed but I know you get it because you’ve experienced it.

Compare creation of a new event in an online platform from a past Excel file. Some systems allow you to upload your file directly into the tool and will flag errors.

Modifications can be made with surprising ease and the integrity of the calculations will be retained.

You may be shocked at the amount of time this is costing you by using Excel.

In my experience, a sandbox demo should make the cost of continuing to use a spreadsheet obvious.

There are many more areas in event creation and execution that can be evaluated in a sandbox to determine the cost of continuing down the same path.

Here is a small sample of other areas to consider as you evaluate the cost. Estimating these costs may take some creativity.

  • How many more concessions from suppliers could you obtain if you had more time to negotiate?
  • How many user and administrative seats are you paying for that aren’t being fully utilized?
  • How many seats are built into your agreement that you don’t really need?
  • What is the cost of recreating an event wasn’t properly backed up and can’t be accessed?
  • What is the risk if a key manager leaves and takes their knowledge of specific events or categories with them?

There is one more issue I would recommend you consider.

CFOs and CPOs want to drive positive change in their organizations. The biggest obstacle they typically face in sourcing and with stakeholders is resistance to change.

I get it but if you are not changing and adapting you will not prosper and may not survive.

I find that the longer an organization has lived with a system, the less likely they are to change.

I like to hear a new client say, “Wow your tools are saving us so much time!”

I am much more likely to hear, “I can’t believe we lived with that old system for so long!”

People are much happier to get rid of pain.

Ask better questions, make changes and 2018 will be your best year ever.

Action Step: If you are uncertain where to start the process of change, a procurement professional like myself can provide guidance and expertise to help your organization achieve the results you want.

If you want to go explore this topic in greater detail, please contact me. I invite you to request 30-minute discovery conversation. In my experience the next step will be apparent at the end of the call. I never assume that what I have to offer will be right for everyone, so don’t expect a sales pitch. You can reach me at (973) 718-7071 x875. The call will be forwarded to my mobile phone if I am not in my office which is pretty likely.

If you would like to know more ways to reduce costs without changing the way you do business, simply give me a call or send me an email with your contact information and the best time to reach you.

You Won’t Drift to Success©

Commit to taking the next step.

Until Next Time, I Wish You Great Success in Your Business and in Your Life

Mike Jeffries