The Procurement Function is a vital part of the Supply Chain Mechanism, which is responsible for the acquisition of mission-critical inputs for the realization of business objectives. Even though procurement plays a pivotal role in supporting critical operations, managing spends, and mitigating supply risks, it often receives less regard than due.

A close examination of Procurement Operations would reveal that the following:

  1. Fragmented Technologies
  2. Cumbersome, Strenuous, Labor Intensive, Error Prone Work Flows
  3. Limited Collaboration
  4. Difficulty in regulating inventories at various points in Supply Chains
  5. Limited Transactional Visibility
  6. Primary focus on Price

The reasons why Procurement Automation is necessary for your organization:

  1. Fragmented Technologies: Managing fragmented technologies are time-consuming, stressful, siloed, and increase the Total Cost of Ownership. Procurement Professionals expend huge volumes of time and energy building bridges between different systems. Imagine all the spreadsheets and systems that exist in a typical supply chain, and reflect on the cost of managing these systems.
  1. Cumbersome, Strenuous, Labor Intensive, Error Prone WorkFlows: Traditional procurement workflows are often error-prone (damaged cells in excel for example), manually driven and more difficult than necessary. Simple errors in the work of procurement professionals can lead to huge cost impacts from inventory buildups, shortages, and order expedition. All these outcomes are cost prohibitive and increase the Total Cost of Ownership.
  1. Limited Collaboration: This often is a result of many systems not speaking to each other and sharing critical information on supply/demand dynamics. This leads to inventory build and Bull Whip Impacts. Lack of Collaboration also Increases the Total Cost of Ownership.
  1. Difficulty in regulating inventories at various points in Supply Chains and Limited Transactional Visibility: The two issues are interwoven and are possible primarily driven by lack of collaboration and transactional visibility. Huge sums of materials, cash, and other resources are consumed also resulting in a high Total Cost of Ownership.
  1. Primary focus on Price: Opportunities for Cost Reduction beyond price are vast, but the required analytics can be challenging for Procurement Professional as it adds complexity. This often results in the neglect of huge opportunities for Value Enhancement and Cost Reduction

Procurement Automation can improve on the drawbacks mentioned in this blog. The key is to quantify the cost of operating in the current state of your organization and compare it to the cost of automating your Procurement Function. Automation can free up the time of Procure Professionals to deal with more strategic matters, reduce error, time spent on tasks, and reduce your Total Cost of Ownership.

NLPA Library: Looking for authoritative procurement templates, tools, webinars, and more?  Stop trying to create resources from scratch and start taking advantage of having exactly what you need right at your fingertips in the NLPA Library.

David Millington

David Millington M.Sc.QSM, NPDP, CL6σBB, SPP, SPSM3®, CM® Director of Education (Next Level Purchasing Association) A Certified Strategic Planning Professional, David Millington brings over 18+ years experience in the Strategy Execution, Product / Service Development, Organizational and Supply Chain Excellence Arenas. He is a Certified Supply Chain Professional, Certified New Product Development Professional, Certified Strategic Planning Professional, and a Certified Lean Six Sigma Black Belt. David holds a master’s degree in Quality Systems Management, from The National Graduate School of Quality Management, Falmouth MA, USA. This equips him with mastery of vast bodies of knowledge and best practices. David Millington brings hands-on experience at VP, Director, and Manager Levels, guiding and facilitating the development of strategic and tactical solutions to intricate organizational, product, and service challenges.

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