If you are a CFO or CPO and have the chance to be on the CBS hit show Undercover Boss, will you do it? This opportunity would allow you to see how the sourcing and procurement process really works in your company. Every C-level executive I have spoken to said they would jump at the chance. You may be surprised by the challenges and frustrations your team faces daily. Especially if you were in their position and had to meet deadlines and goals without the necessary tools and resources. The information in today’s post is based on the feedback we get from the people on the front line at our clients and prospective clients. They all know they could generate greater cost savings if they had the most current tools and the following issues were fixed. Here are just some of the issues that purchasing and procurement groups deal with:
- Critical spend data resides in multiple procurement, payment and financial systems
- Aggregation can only be accomplished on spreadsheets without proper documentation or verification
- Total spending is typically not readily available by SKU, commodity or item across the company
- RFP’s are prepared “offline” using Excel, Word and Email and it takes 40% to 50% more time than needed with an integrated system. The decisions are almost always made without all of the required analysis because of time constraints
- RFP data is not shared across divisions or profit centers without significant time and effort to negotiate and approve it
- Procurement teams develop methods to “work around” the existing RFP platform because it is too cumbersome and frustrating to use especially for more routine sourcing events
- Purchase agreements with built in price increases renew automatically without review because there isn’t enough time to analyze them in advance, key terms are not easily accessible and a central repository for all company locations doesn’t exist
There is one overriding negative consequence of these internal inefficiencies. They all impact morale. Employees that are overworked and feel unappreciated are not likely to work very hard to achieve the company goals. When they reach the breaking point, they leave and take their knowledge with them.
Action Step: If you are concerned about these issues what should your next step be? I would start by asking this question:
Do I really know what the real day-to-day issues are in my strategic sourcing organization?
If it is impractical for you to go undercover in your procurement group maybe you should consider hiring a professional who can be your eyes and ears.
Next week I will offer more insight so your organization can improve your bottom line. 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. One of the companies I represent has tools that can make your strategic sourcing efforts much more successful.
You Won’t Drift to Success©
Think about it.
Until Next Time, I Wish You Great Success in Your Business and in Your Life