5 Steps to Procurement Maturity

What is spend visibility and does your organisation have it?

Quite simply visibility is having a clear idea of what your business is buying across all categories of spend, “who” your buying from and how much it is spending. Many organisations rely on manual processes which make it impossible for them to know how much they are actually spending.

If this is a problem your business has, then solving this spend visibility issue is the place to start. One solution is to carry out a spend analysis program to identify categories where your organization overspends and to analyse which suppliers are the best fit for your company. Implementing a cloud based spend management platform will make it a lot easier for your company to manage this process in an ongoing fashion.

Having identified how much your business is spending, you will probably have discovered that there are some areas where you can make changes:

1. implement new spend control processes into your business
2. restrict the permission of who in your organisation is allowed to purchase from particular categories
3. renegotiate contracts to optimise on value received from suppliers
4. ensure that your staff purchase from preferred suppliers in order to reap cost saving benefits

Organizing all of these factors might seem like an administrative nightmare. Many organizations get stuck in this phase because whilst they know there is a problem they don’t have the time or resources to deal with it.

The answer lies in introducing a sytem to handle the process smoothly for the organisation. A web-based spend management and user procurement portal solution (such as Claritum) can help you: allowing you to define appropriate process steps for your businesses procurement activity.

Organizations in this phase know what they are spending and have implemented controls into their purchasing process. Now they need to work out how to optimise their use of resources. Your business fits in this category if you know you need to automate your business processes to take things to the next level.

Common problems for organisations in this phase include the need to free up procurement staff from administrative and transactional based tasks, to focus on engaging with suppliers and being more service oriented to add value within the organisation.

Companies at this stage may be looking to address any opportunities that are being lost through ineffective supplier management and collaboration and will want to maximise savings and discounts.

In this phase, supplier numbers can be reduced and focus given to suppliers who offer most value to the organisation.

Technology can play a key supporting role in this phase by providing accurate intelligence and enabling truly collaborative supplier management.

Tracking supplier transactions and rating suppliers based on their performance, allows buyers to build up a supplier profile over time that leads to more effective engagement, buying decisions and ultimately savings for the company.

Creating value is all about providing a better, more flexible service to your customers and providing an efficient process for your employees.

Today’s customer isn’t always looking for reduced prices, sometimes what is more important to them is the overall value a supplier delivers and that they deliver on their promises.

In this phase the Procurement team is focused on flexibility, alignment with the business strategy and driving value throughout the organisation.