Digital procurement Q&A: ‘There is no excuse … to not adopt even the most basic toolkit’

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Digital transformation of procurement departments at large corporations occurs so that the enterprises stay cost-effective, strategic and growth-oriented. But smaller businesses can struggle with how to make the case for buying procurement technology.

“There is no excuse for an organization’s procurement team to not adopt even the most basic toolkit,” said ProcurePort Director Jemin Patel, who mentioned that companies have viable options because of the array of procurement technology at various price points.

We recently explored the issue of procurement leaders at mid-market businesses and the hurdles they face in persuading their boards, CEOs and other departments to invest in digital procurement tools. But these businesses have the most to gain by going digital and shedding manual practices, ending paper-based processes, adding visibility across the business, reducing risk and preparing the business to digitally mature even further.

Patel joined us for a Q&A to discuss digitization trends that he sees as mid-size companies consider technology for sourcing and RFIs/RFQs, contract management and spend analytics.

Q&A

Spend Matters: Digital transformation isn’t about just turning paper invoices into digital documents. What do you consider to be the basic functions that need to be digitally transformed?

Jemin Patel: At the bottom of the totem pole I would say the least a company can do to help streamline its procurement process is to digitize their quote request process. This is especially true for manufacturing companies. These companies typically push out a lot of quote requests, and doing that manually using Excel over email is like walking over to all your friends’ houses personally, to invite them to a party instead of sending them an evite.

With the cost of labor so high, organizations should look at everything they can do to create value of the time being spent by their procurement team. If the team is out there chasing emails and assembling data manually in an Excel sheet to make purchasing decisions, they are not focusing on the high-value tasks of making strategic decisions and improving supplier relationships. Automating the quote request process can cut down the time spent on a sourcing project by 30% to 40%.

Imagine the monetary value that it equates to.

Why do businesses have trouble clearing hurdles to adopting procurement technology that can deliver those basic digital capabilities?

That’s the holy grail question I ask myself every day. It is most definitely not cost.

In today’s market, where there are plenty of options for sourcing automation tools at various price points, there is no excuse for an organization’s procurement team to not adopt even the most basic toolkit.

Additionally, most of the enterprise tools in the market are modularized so that you can start with one module and grow into the others as your organization’s digital process matures.

I am seeing more and more procurement professionals taking the opportunity to implement some basic form of procurement automation. I believe that the market may finally have reached an inflection point where it is no longer an option to run your procurement processes manually.

The procurement technology currently available in the market, along with the historic evidence of the benefits it can deliver, is definitely working to remove any hurdles that still remain in this area of digitization.

Do businesses need to have some digital maturity, like having an ERP system, before they add more procurement technology?

I do think that having some sort of ERP is necessary prior to venturing into digitizing your sourcing process. ERP solutions have been around for quite some time and are very mature. The ERP market is nicely organized to service the very large, all the way to the smaller organizations. Additionally, the solutions are also vertical specific, making them even easier to adopt.

If an organization is not mature enough to automate the core of their business using an ERP, they are not ready to automate their sourcing process.

Procurement solutions are also being customized to be vertical specific. At ProcurePort, we have several customers in specific verticals, where we have provided extensive customization to align with their business process. This is somewhat necessary if you are going to make those organizations adopt new sourcing technology.

Luckily, the underlying technology being used is highly flexible, which allows for such custom deployments with very little effort and cost.

How long does it take to implement the basics?

Automating a process as basic as requesting a quote can be done in a day. At ProcurePort, we can deploy a client portal in less than 24 hours. Our client success team can work with the client and have their first RFQ running and live in a day. The solution has been designed with the end user in mind, which makes it extremely intuitive and easy to use.

While deploying all this technology, it is also important to pay attention to the vendor experience. If the vendor experience is poor, it can result in less participation or more headaches for the procurement team in trying to deal with the technology challenges faced by the vendor.

At ProcurePort, vendor experience with our technology is another critical point of focus. Our design team spends a lot of time trying to streamline the vendor experience with the technology.

What do you consider the next step beyond basic digital transformation?

Once you have implemented the basics, it will transform the way you look at your procurement transactions. The value generated from the most basic of digital transformation will drive the procurement team to continue expanding the digitization footprint.

The next step beyond digital transformation is to start looking at all procurement transactions strategically. Having access to your data digitally allows you to see transaction patterns that can drive your future procurement decisions. This is where things start getting exciting, as you are now able to maneuver and tune your sourcing transactions to increase your organization’s competitive edge in the market.

What’s your favorite story of a client finally being able to persuade their company to invest in digitizing the basics? And what were the results of that implementation?

I was contacted by a procurement professional at a large North American company that focuses on the consumer automotive market. He had recently joined the procurement team and was learning the overall procurement process in one of their service divisions. He contacted me and wanted to understand some of our technology capabilities and if we could possibly automate some of the current processes they had internally — to not only drive process efficiency but also generate revenue (basically the solution implementation will pay for itself).

I worked with him to draw up the implementation plan as well as the costs involved related to the customization requirements. He pitched the idea to his boss and generated a bit of interest. However, being a large company, he needed a wider audience and also needed his boss to convince the board.

It took us 14 months and various iterations to the process so that we had covered every possible argument against the technology implementation. He did this by involving his entire procurement team and getting feedback. It was amazing how he was able to get all the stakeholders to talk about the process and over time see the benefit it could bring to the company and at the same time significantly improve the value of the service being provided to their customers.

He was finally able to pitch the idea to the board along with his boss. The board loved it, and they made him a core member of the implementation team in charge of making implementation decisions.

The digitization project was implemented in phases and delivered the projected results and much more by the time it was fully implemented. Not only did it cut their customer time from service request to completion by 60%, but it also significantly improved their customer satisfaction rate as well as their relationship with their vendors.

Everyone was a winner.

What advice do you have for companies that are beginning this process? How should they evaluate which functions they need to digitize first?

The old advice of “Walk before you run” rings true no matter where you apply it. I would advise companies to first sit down and spend time mapping their procurement process. Who are the people that would be touched by this digitization process? Customers, vendors, management, employees, etc. Pick a function that touches the least amount of people and is the least expensive to automate.

This Brand Studio post was written with ProcurePort.

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