Purchasing with a Purpose: Supporting High-Level Goals through Strategic Procurement
Traditionally back-office functions like accounts payable and procurement are moving into the limelight. The AP department, for example, is increasingly recognized as the central hub for controlling spend management.
Much like accounts payable, procurement can also play a strategic role in a company’s long-term plans to support high-level goals. Strategic procurement can leverage discounts for the company, build relationships with suppliers, track supply and demand trends, and much more.
Strategic procurement aligns the entire procurement process with a company’s business goals, overall purpose, and mission. It requires support from the entire company but relies most heavily on the procurement department and, to a lesser extent, on the other financial departments. Purchasing with a purpose begins with optimizing procurement and linking it to your company’s strategic goals.
If the procurement department is spending all its time buried under paperwork or untangling mistakes, then there won’t be much time for strategic planning and support. Before procurement can play a key strategic role in the company, it needs to optimize the purchasing process.
Digital procurement automation tools make optimizing and managing procurement simple. A procurement automation platform like NextProcess makes it easy to run your company’s entire procurement process through one centralized platform. Since we don’t charge additional licensing fees, you can give as many users access to the platform as you want without extra cost.
Everyone in charge of managing procurement and placing orders will be working through the same platform. Tools like punch-out catalogs and item catalogs make it easy for purchasers to know exactly which products and suppliers are pre-approved by your procurement department. It’s easy to shop within NextProcess’s procurement software, and the system automatically generates POs for each order.
Plan Before Automation
Whether you’re digitizing for the first time or switching to a more efficient procurement system, you’ll want a plan in place before automating. There are several common mistakes that companies can make when implementing an e-Procurement system. Having a plan in place will help minimize the risks and maximize the benefits of digitizing.
Start with collecting data. Analyze how your current procurement system works and take note of what works and what doesn’t. Get feedback from those working in the procurement department and find out what they want in a new system. Work with the CFO to ensure that procurement’s goals align with the whole company’s strategic financial goals and keep those lines of communication open throughout the digitization process.
With a plan in place, you’ll have the groundwork needed to successfully transition to digital procurement. Working with a software-as-a-service company like NextProcess makes implementation and customization easy. We’ll make sure the implementation goes smoothly and help you customize the software to your strategic goals. Our software is highly customizable. You can set it to automatically enforce company policies. Even parts of the interface change for different users, depending on how they need to use the software.
Collaborate on Goals and Policies
Once you’ve made a plan for automating and digitizing procurement, looped in the CFO, and moved forward with implementation, make sure to keep this collaboration and communication ongoing. If your goal is to support high-level goals with strategic procurement, then you’ll need to make sure the procurement department and the rest of the company continue collaborating effectively.
Work with the rest of the company to define procurement policies and set goals that align with the company’s mission and strategic plan. As time goes on, continue refining the procurement strategy to meet key business needs.
Strategic Procurement Roles
There are many ways that procurement can support a company’s high-level goals. Much of this involves things procurement is already doing, like tracking purchasing trends and looking ahead for potential supply chain disruptions. By automating and simplifying with NextProcess, you’ll free up employee time to focus on those strategic roles procurement plays and communicate with others in the company to support high-level goals.
Mange Spend and Cashflow
Procurement is in a unique position to leverage discounts for the company. These benefits are particularly pronounced when aligning procurement and accounts payable since purchasing and AP can work together to negotiate early pay discounts.
Procurement can also take the lead in helping manage and reduce company spend. When you centralize purchasing with software-as-a-service, you’ll have the insight and control needed to enforce spend policies. You’ll be able to reduce or eliminate common issues like maverick spending and duplicate purchases.
Manage Supply Chain
Managing the supply chain is always a top priority for procurement departments. With all the supply chain disruptions since the 2020 pandemic began, tracking supply and demand trends and managing your company’s supply chain is more important than ever.
Procurement has its finger on the supply chain pulse more than any other department. Strategic supply chain management will minimize downtime at your company that could be caused by shipping delays, back-orders, and sudden price increases. With automation software supporting procurement, you’ll also have more flexibility in creating a hybrid of lean and agile procurement strategies that will work best for your company’s unique needs.
Having a procurement department that’s already cultivating solid supplier relationships is especially important during times of supply chain stress. When your suppliers trust you and think of your company as one that’s easy to work with, they’re more likely to prioritize filling your orders during a shortage and communicate potential issues that they notice on the horizon.
Established relationships with suppliers can also support your company if you choose to negotiate an accommodation agreement with suppliers. This strategy is used in the automotive industry to help keep the supply chain working when suppliers are struggling. It’s not the solution to every supply chain disruption, but it’s effective in some situations.
A company’s supply chain plays a huge role in making business practices sustainable. With environmental sustainability at the forefront of many companies’ goals, it makes sense to get procurement invovled with supporting environmental, economic, and social sustainability.
The procurement department supports a company’s long-term economic sustainability by making responsible supply chain management decisions and planning for the future. It also supports environmental and social sustainability by partnering with suppliers that meet sustainability requirements. On a smaller scale, procurement can also contribute to environmental sustainability by going digital and cutting back on paper use.
Analyze Essential Data
By digitizing and automating procurement, you’re also digitizing and automating data collection. All the information related to purchasing is available at your fingertips. NextProcess makes it easy to check on purchasing information that updates in real-time. It’s also very easy to run reports, check on specific transactions, and look at trends in the data.
Access to accurate, complete data enables your procurement department to solve procurement problems, prevent issues from developing in the department, and realize more value from the procurement process. And with the time procurement employee are saving due to automation, they’ll have the time needed to analyze this data and put it to good use. Companies that effectively leverage procurement analytics can boost procurement’s strategic impact while reducing costs and risks.
One more way to support strategic procurement is with category management. As a company grows, procurement can start to get a little “messy.” Category management breaks down procurement into manageable sections, segmenting purchases into categories like “utilities,” “IT,” and “office supplies.” Procurement can also collaborate with capital projects and travel & expense reporting to link-up managing those expense categories as well.
Implementing category management makes it easier for companies, particularly larger ones with complex procurement departments, to analyze procurement data. You’ll be able to look at data and analyze trends within categories as well as across procurement as a whole. It also makes managing procurement easier.
Purposeful Procurement with NextProcess
Digitizing your procurement system with NextProcess’s Purchase Order Module provides immediate oversight into your company’s spend. Automation tools simplify data capture, purchase order creation, and policy enforcement. The flexible software is easy to customize for your exact needs and goals. It also scales with your demand, adjusting easily to slow months or to company growth.
If you’re interested in improving your procurement system and leveraging it to support high-level company goals, contact NextProcess. We’ll be happy to answer any questions you have and set up a free demo so you can see first-hand how our software system could work for your company.