Six Reasons You’re Still Stuck In Procurement 1.0
Robobai surveyed 250 procurement specialists and asked them what their pain points are within a growing organisation. Chairman and Founder, Julian Harris, shares the top six reasons you’re stuck in procurement 1.0…
Every business has the desire to grow and succeed and as a result of this targets are set to support the overall objectives of the GDP. It is natural to encounter many roadblocks along this journey and procurement is seen as an important area as it can both block or support growth.
We have recently surveyed 250 procurement specialists and asked them what their pain points are within a growing organisation. We then established the six biggest pain points from their perspectives.
1. The companies had outgrown their supplier base
79 per cent of the people we spoke to said that their businesses were not driving innovation in supplier relationships. The common theme being their existing suppliers weren’t adapt enough to support their growth model and that they did not have the correct systems in place to evaluate potential new supply partners in an efficient and fast manner.
2. Their current systems were inadequate
85 per cent of our survey said that they overall procurement process was to complex and resource heavy. The existing systems and processes simply aren’t up to the job and as a result Account Payable are constantly battling to keep on top of the processing and payments of invoices.
3. Poorly equipped for investment or acquisitions
According to our results, 76 per cent of procurement specialists said that with their current systems and processes, they would not be able to provide the relevant due diligence to any potential investors. This is a massive barrier to a company that is looking to expand in anyway.
4. Managing rising costs
81 per cent of companies admitted that they don’t challenge suppliers enough on cost or performance. The truth is, they are struggling with rising costs against income which is effecting profits, but they have inefficient systems in place that don’t allow them to manage their supplier contracts properly in these areas.
5. Ineffective supplier management
44 per cent of our specialists said that they need to manage their suppliers more effectively. They basically don’t have access to enough good quality data on suppliers to allow them to effectively challenge and negotiate the best deal for them.
6. Not enough control over spending
In our research 40 per cent of respondents said that they need to improve their budgeting controls. There are compliance issues surrounding using approved suppliers, and to fix this change is required to both their systems and culture to give the required visibility of spend.
Is Data really the answer?
For optimum results, you need optimized data
The benefits of good data are no secret. You will constantly see things written and hear conversations about how powerful data can be with regards to driving efficiency, reduce costs and even keeping customers within any business. But, in the world of procurement it is a must have. Why? Because with the right data you can massively improve your return on purchasing goods and services.
High quality, cleansed data helps to drive a more strategic view of procurement. It enables teams to make informed decisions, earlier in the procurement lifecycle. If you don’t have it, then sure you can view total spend, but in a very inadequate way doesn’t allow you to understand the size of the cost saving opportunities that exist. These opportunities may include variance in pricing, contract terms, consolidation, payment discounts or duration. You need cleansed, granular data to be able to provide good insights to make the right purchasing decisions. You simply can’t do this efficiently without having access to a platform that provides this quality of data in a timely manner.
Often, one of the biggest challenges in an organization sits in the realms of data. Without good quality data cleansing and data classification you will never have a genuine spend visibility.
When a company has good spend visibility they get timely, accurate, complete, and detailed data which offers invaluable intelligence and insight on their spending patterns, compliance and performance. These insights help them identify savings opportunities, drive compliance, and develop purchasing strategies which reduce cost.
Julian Harris, Chairman and Founder – Robobai, spoke at Big Ideas Summit Sydney.
