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Benjamin Ho, Deputy Procurement Officer, City of Chicago Department of Procurement Services
Partnering with Procurement to Increase Automation
By Aaron G. Thum, Executive Director, Procurement and Vendor Management, GardaWorld Cash Services
Typical annual goals set within an organization may cause IT and Procurement to start the year on totally different paths within a company. A CIO may be goaled on upgrading, improving and uptime, while Procurement is goaled on savings, simplifying and reducing. Both functions seem to start the year with objectives that at first glance look to be polar opposites. When examined closely, however, IT and Procurement have more similarities between their functions than meets the eye.
“It’s about creating a working relationship to engineer the automation of common manual processes”
Both groups are driven to protect the company, reduce risk, streamline processes and ultimately help operations achieve the best possible outcomes with the greatest ROI. Both groups are striving to educate others within the organization of the significant value they contribute to the business. Both groups touch all other functions within the business while also possessing the ability to generate tangible bottom-line results. So it naturally makes sense that when these functions work closely together, something truly great can happen. They can combine their expertise to become a significantly more potent driver towards achieving business results and positioning an organization for future success.
This isn’t about working together to negotiate a better deal on laptops or the next software renewal (although they should be partnering on those initiatives as well). It’s about creating a working relationship to engineer the automation of common manual processes. Utilizing technological automation can play a huge role in achieving the goals of both functions (upgrade/improve/speed-up and simplify/save/reduce) at the same time. Even better than achieving the annual goals is watching the contributions made to the business overall—establishing a long-lasting infrastructure, building competitive advantage, speeding up execution and reducing waste to name a few.
There are many different automation projects that can drastically change the efficiency of a business. Although the potential projects differ greatly based on each business and its needs, here are two examples that can apply to most medium or larger sized organizations in general to illustrate this point.
Start a conversation by reviewing the current purchasing system and surrounding processes as a team. Chart out the exact flow of events from beginning to end. Begin with an initial need, move through the requisition process, approval flow, on to the PO process, receipt, payables interaction, accounting transaction, and end when you print the P&L at the end of the month. Then, ask questions. How much labor is involved in doing menial administrative tasks that could be automated? How many errors occur? What is the quality of the data that can be pulled? How quickly and easily can the data be pulled? You may be surprised to find out how many times human intervention is required in what, by today’s standards, should be a completely automatic process. The ability to remove labor resources from basic administrative activities and re-allocate them to more direct savings projects will pay huge dividends. It will ensure that all data is clean from the very start, which also leads to making better business decisions and stronger negotiating leverage.
Another great example is the automation of contract management. Depending on the business size and needs, contract management may require many more resources from an organization than one would expect. Contracts within an organization usually require many hours of labor from highly paid personnel (legal, contracts, executives, amongst others.) to produce, review, approve, modify, and negotiate. Great contracts are certainly worth the investment since they ultimately affect the long-term performance of a business in every way, but what is the cost to continually manage those contracts efficiently? The ability to have a standard contract template with pre-made clauses will reduce reliance on legal review and risk. If something new arises, it can just take an hour of legal review to create a new paragraph instead of reviewing the whole contract. Automated routing of exceptions for approval can ensure that the chain of command is never broken while increasing visibility and significantly reducing completion times. Utilization of a central cloud repository with access control can simplify the management of agreements and allow the appropriate personnel access to the right information when it is needed.
The opportunities are there. It can be as complex or as simple as your business and budgets require. But this type of perspective and partnership is what shapes the future of a business. It is what drives an organization to be best in class and do so much more, so much faster, while using so much less. These results are what will elevate both teams as potent contributors to the business.