Process Automation in Procurement with a Focus on Controlling Tail Spend

Process Automation in Procurement with a Focus on Controlling Tail Spend

If you could automate the procurement process for low value items and gain control over tail spend, what would that mean for your company?

Based on my experience, here are some of the benefits:

  • Dramatic increase in spend under management
  • Significant improvement in data quality
  • Elimination or reduction of transaction costs
  • Elimination of nuisance suppliers
  • Reduced maverick spending
  • Visibility into the spend data in real time

All these benefits translate into hard cost savings and operational efficiency.

One underlying principle is that any process that you select to automate will be a significant improvement over what is being done now.

The new automated processes don’t have to be perfect. The 80/20 rule is ideal in evaluating the benefit.

If I can get 80% of the benefit with 20% of the effort I am signing up every time.

Let me share how companies are using process automation tools to reap these benefits.

  • The first step is to identify as many manual procurement processes as possible that could be automated.
  • Next, the current steps for each process are detailed.
  • Each process is then reviewed to determine how it can be simplified. Every individual who is buying an item or service can help streamline this step.
  • Set the revamped process up in the process tool and have stakeholders use it.
  • Modify the process as appropriate.

What you should typically find is that the process for most of these purchases can follow a similar path.

Some examples of purchase processes for you to consider:

New mobile phones – this and other typical needs for new employees can follow the same process – replacement phones can also be covered

P-cards – eliminating purchase orders for recurring purchases saves significant time and money. The data that will be collected will help identify additional savings opportunities.

Facility services – getting control and visibility into these purchases will allow better management across multiple facilities

Equipment purchases – stakeholders are often unaware of negotiated savings agreements on common items

An NDA or any document required to qualify a new supplier can be set up in a secure process. Clearly this is better than email.

Virtually any process in your supply chain can be streamlined.

Eliminating emails, the conversation in the hall and phone calls will provide significant time savings for your team.

Any process from simple to complex can be automated and the tools are intuitive and quickly modified if necessary.

One caveat.

No tool will do everything for every organization, but the procurement group will be getting a lot more love for the processes they simplify and automate.

One client identified eight processes they wanted to automate and less than three months later they are reaping the benefits.

They determined that they save over $200 for every purchase order they eliminate.

This makes it easy to make your business case to add a process automation tool.

If you and your team are frustrated by the chaos, lack of visibility, lack of reporting etc. perhaps it is time we talked.

In most cases, I can determine if I can help you in 30 minutes. At that point we can decide if further discussions are appropriate.

Most people appreciate my candor if I can’t help them so either way it will be an efficient use of your time.

Ask better questions, make changes and 2020 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