We know that technology is the backbone of any successful organization and, as a company grows, it must constantly add and change the internal tools that will enable it to stay competitive and profitable.
This applies as much to Procurement as to any other department within an organization.
But new technology on it’s own can’t overcome gaps in a broken or non-existent Procurement process.
In fact, some Procurement groups will actually create redundant steps when forced to incorporate new technology solutions into an overly complicated, inefficient procurement process
Case Study: Procurement Process Redundancy
Many years ago I worked for an organization that was using:
- A home grown Purchase Requisition system to create and track internal requests for goods and services
- An add-on document management module from the corporate Print solution for Contract Management
- An add-on module from the corporate ERP system for Purchase Orders; and
- An add-on module from the corporate help desk ticketing system for Asset Management.
Since none of these disparate systems were integrated, the Procurement team had created a series of processes to manually input information into each of the systems for every purchase.
The overall process was incredibly redundant and full of vulnerabilities.
Purchasing agents would print out fully approved Purchase Requisitions and manually input the information in the ERP systems to generate Purchase Orders.
Contracts would go through several redundant approvals before final approval and signature, only to be stored in a standalone document repository with limited search capabilities.
Assets were received and tracked in a separate Asset Management system that required manual receipt of products and a 3-step invoice approval process.
Having failed several audits, the organization purchased very expensive Purchase Requisitioning and Contract Management add-on modules from their ERP supplier, who assured them that their solution would provide an airtight Procure-to-Pay solution for the company.
What the supplier failed to highlight, and the organization failed to address, was the cost and effort to redevelop processes, retrain employees and re-input years of historical data across 4 different legacy platforms.
So several years, and millions of dollars later, the add-on modules are collecting dust and the organization continues to limp along with even more redundant process bandages to stop the bleeding.
There have been exponential advances in Procurement technology over the past 20 years. And in the hands of skilled Procurement professionals the results have been amazing.
But Procurement tools are very closely integrated with Procurement processes.
Before investing in new technology an organization should evaluate the processes that are in place and then determine what, if any, new technology can be easily integrated into the organization without creating redundancies or complexities that will increase costs.