The benefits of eProcurement – not just the obvious

During my recent meeting with Hubwoo, they told me of a recent client “win” that illustrated some good points about major eProcurement implementations.

This was with a major FMCG firm, and Hubwoo triumphed over a short list that included both mega-global eProcurement players and regional specialists.  But it was the internal driver for the programme that was particularly interesting. We tend to see P2P business cases driven by efficiency improvement and cost savings through eliminating paper, reducing staff workload and improving processes.

But this organisation started with a different need – the desire to understand their contractual position and manage the risk around that.  So senior management were concerned about the lack of visibility of contracts to which their organisation was committed, the lack of any standardisation of Ts and Cs, or knowledge of when key contracts were ending or had significant break-points. So that was the driver for the investment.

And that suggests a killer question to ask a CPO.

“Are you aware (or can you quickly find the details) of every significant supply contract your organisation has committed to”?

Very few can answer “yes” in my experience, even including some of the perceived leaders in procurement best practice.  And I confess, in the five organisations I worked for as a procurement manager / CPO, I could not have answered 100% positively in any.

Anyway, the Hubwoo client saw that as the prime reason for putting the technology in place, with supporting policies and processes. Of course, having done that, other benefits followed – “one of the first auctions we ran, for a key raw material, paid for the entire investment”, was the comment. Other process improvements also followed – for example, building “approval gates” into the category management process.

Were there any other key lessons learnt from this particular project? They were what we might describe as “the usual suspects” in this type of programme, but none the less important for that –

  • Make sure you have early engagement of internal stakeholders
  • Make sure you have early engagement of suppliers
  • Get strong internal sponsorship from senior people

Not rocket science maybe, but nonetheless vital. And this example just demonstrates the many different benefits that organisations can derive from an effective procurement technology strategy – from efficiency in the process, to better compliance; to contract visibility... the list goes on and on!

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First Voice

  1. Dan:

    “Are you aware (or can you quickly find the details) of every significant supply contract your organisation has committed to”?

    Yes – sometimes the audit-driven processes of the public sector has its benefits…

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