Given the number of transactional activities in many traditional procurement departments, a significant part of the available time is used for things that “do not move the needle”. However, requesting quotations and evaluate them, getting prices in the systems and getting a purchase orders out can consume quite some resource. And rightly so, this is what the end users / stakeholders at least should expect. Otherwise, how can they get efficiently the required goods and services and have an efficient budget and payment process?

While that being the case, we have seen models whereby the inefficient processes have been moved to service centres around the world. That has brought a reduction in the administrative cost burden, but doing non-value-added services against lower cost is not a root cause solution, it just focusses on a symptom (high costs transactions).

What about if we do this completely different? Automate out non-added-value activities. Refocus and align the resources around activities that “move the needle”, upgrade the procurement teams with digital expertise around effective price / contract / transactional management and ensure transactions happen highly automated. Think end to end, including efficient and agile supply chains including stock management, supplier relationship management and the increasing need for information exchange, including areas like regulatory and sustainability. For indirect materials and services, think about effective and efficient ordering processes, like catalogues. And for all ensure that you have market information at your fingertips and do almost fully automated price management by simplified ongoing RFQ’s.

Frequently we hear: “We are different” or “Our IT landscape is difficult”. While that is more an excuse to accept the status quo, in fact it is a perfect reason to start acting. All arguments you can come up with will in the end not hinder you to develop a better set-up with less non-added-value handling of transactions and better and more efficient tendering / contracting processes.

It is better that you start on this journey now. It is expected that with 5 – 7 years almost all activities current done in traditional procurement departments (and vice versus in sales departments) will be automated out. Start building your future foundation to enable these processes. If you don’t do it, others certainly will and they will not only have lower transactional costs, but their procurement process will also lead to better deals, from better suppliers, with more value delivery on all fronts, simply because the procurement had time to work on them as their routine work burden has been automated out.