Here’s How CPOs and CFOs Can Digitize Procurement Strategically
As digitization becomes standard in the business world, companies that haven’t yet digitized procurement are likely considering the possibility. If you’re going to make that move, though, you want to make sure digitizing will be an improvement.
Taking procurement digital can be a good thing for your company. This is especially true when the CPO and CFO work together on a strategic plan for how procurement fits into the company’s long-term goals. There’s a lot of overlap in goals related to procurement and finances, and collaboration here will help make purchasing more strategic.
Digital procurement solutions work best when they’re implemented along with a solid procurement strategy. Digitizing your existing procurement policies, strategies, and organization will likely provide benefits such as faster processing times and easier usability. But to get the most out of e-procurement, it helps to plan ahead for how your company will take full advantage of the benefits digitization offers.
Laying the Groundwork
If your CPO and CFO don’t yet collaborate, then it’s time to bring procurement in on the strategic planning for your company. Getting procurement involved provides vital data for financial planning. Similarly, more open communication empowers procurement to support company-wide financial policies and initiatives.
For example, CPOs have connections with suppliers and insight into supply trends that they can help CFOs leverage strategically. In turn, CFOs can support CPOs in shifting the focus of procurement off immediate cost-savings and onto broader metrics including performance, innovation, and long-term cost-benefit planning.
As you go forward with strategically digitizing procurement, make sure these lines of communication stay open. It’s not very effective to start planning collaboratively unless you also commit to continuing working together. Maintaining communication helps keep procurement aligned with the company’s overall strategy and makes it possible for CPOs to keep CFOs appraised of any changes or potential issues.
Optimizing a Digital Solution
According to the Deloitte Global 2021 Chief Procurement Officer Survey, “The top three barriers to effective application of technology in procurement … are poor quality of data, poor integration across applications, and lack of funding.” While procurement departments recognize the benefits of digital technology, implementing it effectively depends on a variety of factors. Not having access to reliable data, struggles integrating digitization across platforms, and lack of funds for digitizing all present obstacles for digitizing procurement effectively.
Given those challenges, it’s not surprising that the survey also found “the top two enablers of successful digital procurement transformation are a clear enterprise digital strategy (with executive sponsorship) and maintaining a holistic view of digital transformation.” Sponsorship from the CFO for digital initiatives gives procurement a vital edge in optimizing their digitization. Ideally, procurement will be one of many departments being digitized together. Using a software suite like NextProcess to digitize multiple financial departments (such as accounts payable, procurement, and capital projects) makes holistic integration of digital solutions far easier.
Clarifying a Procurement Strategy
With collaboration between CPOs and CFOs and executive support for improving procurement, moving forward with digitization becomes far more feasible. The next step before digitizing, though, isn’t digital at all.
CFOs, CPOs, and the procurement team must work together to develop a strategic plan before digitization. Clarifying how your company will meet goals related to efficiency, cash flow, supplier relationships, and more will guide the ways you use digital technology.
The main idea here is that you want technology to support your procurement goals rather than dictate them. If you digitize and then work backward from that to define goals, your procurement solution won’t be as sustainable as it could be. Define your goals first, then use all the cool features that come with digital procurement technology to support those goals. NextProcess’s flexible software makes this process simple with extensive customization options. We’ll work with you to program the software to fit your company’s individual procurement strategy and goals.
Implementing Digital Procurement Software
Now that you’ve defined your goals and laid the groundwork for successful digitization, it’s time to implement your new software system. Make sure the software system you choose contains the features needed to meet your procurement goals and that it is user-friendly.
For example, using a software system from NextProcess means your new procurement system is customizable and integrates seamlessly with other NextProcess modules and with existing ERPs. Our software also features an intuitive interface and user-friendly features like Punch-Outs and Item Catalogs to make purchasing simple for employees.
NextProcess is closely involved in the implementation process to ensure everything goes smoothly. To learn more about making the move to digital procurement, can check out our articles “3 Cornerstones That Will Help You Successfully Transition To Digital Procurement” and “How To Avoid the Most Common Mistakes That Companies Make When Implementing New e-Procurement Software.”
Leveraging Digital Technology
After you’ve started digitizing, it’s time to put that digital technology to work. Remember that the Deloitte 2021 survey identified poor data quality as one of the most significant barriers to optimizing digital technology. NextProcess’s purchasing module will help you keep data organized and automatically gather important data related to processing. It’ll also increase your access to data by storing records in a digital, easy-to-search database. That makes it easier to strategically put data to work for your company.
In addition, the intuitive user experience offered by cloud-based e-procurement software like NextProcess’s makes it easy to train employees in the new software. This makes the transition easy on your existing employees and makes onboarding new employees smoother. Also, since the software is easy to use and frees up employee time by automating certain aspects of purchase order processing, you’ll be able to cross-train employees more easily.
You can also leverage digital procurement technology to reduce costs and manage cash flow. E-procurement software helps you avoid the most common purchasing mistakes such as going over budget, making snap decisions, maverick spending, and more. If these benefits, and all the others we’ve talked about in this article, sound like something you want to take advantage of, get in touch with NextProcess. We’ll be happy to answer any questions you have and set up a free demo so you can see our purchasing software in action.