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Why Procurement Is Exciting: How You Can Improve Your Procurement Through Technology

Procurement Tech

Procurement is exciting.

Don’t believe me?

That’s fair. People often think of procurement as complex and tedious.

Making sure that a company has paper, (including toilet paper in the restroom) and all the supplies it needs to make its products sounds…well, dull.

Let us offer you a different perspective using sports as a metaphor. In American football, a well executed block by a lineman is a relatively boring play. Compared to a quarterback throwing a pass, or a running back getting a first down, a perfectly executed block is mundane.

However, those “boring” blocks set up everything else for the rest of the team.

Or maybe you enjoy football (soccer for you Americans). In that case, think about a well executed pass. Not something the sports commentators usually choose for a highlight reel – but the reality is, without a good passing game, those strikers can’t make their incredible plays.

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Procurement is just like that offensive lineman doing a block, or the soccer player giving a great pass.

When it’s done well, your business can run like a championship team.

And if you are the type of person who is more motivated by the stick than the carrot, consider this: when procurement is done poorly, everyone on your team suffers.

It’s like the American football player missing the block and letting his quarterback get hurt. Or the soccer player passing the ball out of bounds at a crucial point in the match.

In this post, our goal is to give you a few actionable ways you can improve your company’s procurement.

Let’s dive in.

How to Run a Smart and Efficient Procurement Department

Procurement

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If you want to prevent potential fiascoes and fraud, being proactive about upgrading the technology in your procurement department is a smart move.

There’s a silver lining too: the money you spend on procurement will improve the efficiency and effectiveness of your procurement in the long run.

So, it’s not unreasonable to say that money spent on procurement processes and systems is an investment.

Here are a few ways you can do this.

Supplier management

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A big chunk of your time in procurement goes on managing your suppliers.

You have to find suppliers who:

  • Have the right qualifications and certifications
  • Have high quality standards
  • Have a good reputation
  • Share your company’s values

It can be a lot to keep up with.

Digitization enables you to manage all these complex relationships at a glance, with minimum manual effort.

Multi-location management

Procurement is all about making sure you have the right products/services when and where you need them. And when you’ve got a boatload of individual items you need to manage across geographies and currencies…things get tricky. Even Elon Musk has to deal with that.

Now imagine you have head office and several secondary locations. How can you ensure that everyone orders the same things at the same price? How do you make sure that you don’t overspend or have items delivered to the wrong location?

Using a digital multi-location management tool makes all of these problems… disappear.

Automation

Imagine this scenario: You go out to dinner with your significant other. You spot a dessert on the menu you know you absolutely must try.

So, you order a smaller dinner portion to make sure you leave room for the delectable delight. When it’s finally time to place your order, the waiter regretfully informs you the delicious dessert is not available that evening.

Ouch.

You go home seething, vowing never to visit that restaurant again.

This is obviously not a good situation on a personal level. And on a business level, running out of stock is much more damaging.

Automation software can help, by making use of the colossal amount of information you’ve aggregated over time. Using this data, you can predict:

  • The right time to place new orders
  • How seasonality affects your inventory
  • How special events can impact the demand for your on-hand inventory

Automation isn’t just for inventory management. You can use it for other tasks that impact your procurement process, including initiating and receiving RFPs, keeping track of supplier certifications and ensuring other documentation is up to date.

Online bidding

Let’s think about eBay for a moment.

This website has revolutionized how people buy and sell products and services using the auction system. Buyers find what they want, bid what they’re willing to pay and then watch the results closely.

Depending on how the auction goes, buyers determine if they need to increase their bid or lose out on the object their heart desires.

Now savvy procurement departments are utilizing the auction system to become more efficient in sourcing their materials. However, they are doing it in reverse. Increasingly, companies are beginning to utilize reverse online auctions to manage their RFPs.

Suppliers who are interested in getting you to buy their products will place their bids. This is used primarily to obtain the best possible price, so suppliers will bid anonymously against each other, going lower and lower with the lowest price ultimately winning.

Ready To Make Procurement Exciting?

We’ve outlined some new technology that can help make your procurement department, one of the key pillars of your business, more effective and efficient.

Which of these technologies do you think is the most potentially powerful?

Let us know in the comments.

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