Strategic Procurement Series - Part 1: What is Strategic Procurement?
Let’s face it, procurement and the process of navigating spend approvals can come across as an annoying, road-blocking, and bureaucratic process to many within a company. But automation and efficiency in the procurement process is helping these teams navigate such challenges by helping Procurement and Finance teams:
- Answer fewer questions in the intake process.
- Achieve the necessary approvals faster.
- Instantly gain visibility into the status of requests.
But even with these incredible advancements in automation, there remains a significant gap in procurement tools and processes that even the most advanced procurement processes fail to address.
Intake-to-Procure and the missing link in the Procurement Intake Process
Tools such as Sudozi have begun to automate the Intake-to-Procure workflow, enabling Finance and Procurement teams to streamline the collection of requests and automate approval workflows to ensure key stakeholders are reviewing relevant requests.
These systems have been game-changing for the office of the CFO, leading to great strides in Procurement efficiency and ultimately translating into meaningful cost savings.
Without Procurement tools, teams are left with inefficient processes and spend much of their working time being contract administrators rather than focusing on strategic sourcing and the highest impact projects.
Yet, if you ask Procurement teams if they have all the tools and data they need, they’ll often respond with some missing gaps. Many are still lacking in the holistic system they need to streamline intake, automate approval workflows, and store data. In particular, existing Procurement tools are execution-focused and limit the ability to engage in truly Strategic Procurement decisions: these tools ultimately lack the budget context and financial analytics necessary to help companies achieve profitability goals.
What is Strategic Procurement?
If your Procurement process does not integrate analytics and financial data to inform requests and streamline decisions, then your procurement process is not Strategic.
Strategic Procurement is the process of empowering requesters with upfront data to inform requests, and arming your approvers with built-in analytics and budget insights to inform decisions.
What we’ve found from chatting with hundreds of teams is that what many teams are doing is Strategic Procurement, but their tools haven’t caught up with the dynamic nature of their roles.
Key data in the Strategic Procurement workflow begins with budget data and financial actuals – helping teams answer the “how much budget is left?” questions. Whether it is the requestor or the approver, someone should have this data surfaced automatically. Without the ability to answer this question at the point-of-review, your team is likely not employing a Strategic Procurement process.
We’ve seen the best Strategic Procurement processes include each of the following datasets in the procurement tool:
- Historical Vendor Data: Your Procurement tool should integrate with your ERP and dynamically pull-in financial data upfront. You shouldn’t have to go to 4 tools to find out historical vendor spend.
- Budget Data: Your Procurement tool should be able to ingest Finance budget data, or otherwise integrate with your planning tool.
- SAAS Usage Data: your team should have the ability to immediately assess how many users are leveraging a particular software tool to help inform licenses efficiency and new vendor decisions.
- Spend Analytics: Your Procurement tool should summarize key procurement process data, helping identify opportunities for efficiency improvements (e.g. how many days do software requests get held up with the Legal Department).
- Integrations: Procurement tools should integrate with other key systems, including vendor security platforms (OneTrust), and CLMs (Ironclad) to pull-in relevant context/data into your Procurement tool. Without such integrations to your other key vendor systems, Finance and Procurement cannot truly orchestrate a holistic review process.
Strategic Procurement is Data-first
In short, Strategic Procurement is a data-first Procurement process that empowers finance and procurement with an ability to make strategic, data-driven decisions at the point of review.
Stay tuned for Part 2 of this post where we’ll share more about the first step in any Strategic Procurement process!
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