Would You Like Fries With That? The Case for Self-Service Procurement
Whether we like it or not, self-service is a fact of life, from the McDonald’s kiosk to the grocery store scanner.
Procurement hasn’t always had the best reputation for managing stakeholders and providing buyers throughout the business with the speediest service. While we don’t exactly want drive-through procurement, making it easier for employees to buy what they need, makes a lot of business sense.
Is it time to provide Amazon-like procurement experience in your organisation, especially for indirect spend items? While it may seem like self-service could cause maverick indirect spend to boom, it’s a way to control it. After all, maverick procurement is happening, whether you know it or not.
Blame the Amazon effect for that. The e-commerce giant, along with Alibaba, ThomasNet and many others, has trained your colleagues to buy whatever they want at the click of a button. They are frustrated by complicated procurement procedures to purchase the things they think they need to do their jobs.
In a recent survey, 82% of procurement leaders said they don’t have a good handle on their indirect spend. A vast majority said their sourcing technology is outdated and clumsy to navigate use. It’s no wonder that 85% believe business users would better comply with purchasing processes if the company offered intuitive self-service technology.
The pandemic-induced work-from-home trend accelerated the adoption of self-service purchasing. Employees could purchase supplies and equipment to set up the home office. Once you’ve given employees the power of self-service, it’s hard to take it back.
We’re not talking about the significant buys that still should be managed by the procurement department, such as raw materials or logistics and transportation contracts. But it’s about more than pens, paper, printer ink or other items for personal use.
Human resources may manage employee travel, and marketing invests in trade show booths and multimedia production. Departments may license software and services directly. Procurement oversight becomes fractured, and unknown amounts of money are spent outside of the process. Organisations spend millions on miscellaneous items that keep the operations running.
Handling big data
Because indirect spend is often decentralised, procurement leaders have been challenged to get a handle on it. It’s time to bring the same level of competition, rigour, and transparency we use for direct spend to buying indirect goods and services.
Many big-time ERP and procurement solutions like Oracle and SAP offer this functionality. Amazon Business is geared to bring the Amazon effect to corporate purchasing departments. One of the main goals is to ease the burden on procurement and financial teams. With routine purchases and payments automated, these teams can focus on strategic initiatives.
Self-service solutions could help with procurement’s big data problems. In the From Insights to Impact: Driving High-Performance Procurement report byProcurious and SpendHQ, 75% of respondents doubt the accuracy of the procurement data they present. That leaves 79% lacking in confidence in the data to make strategic, informed decisions, according to the survey.
Those companies deploying an automated procure-to-pay solution see a 15% to 25% savings in most transactions and process payments in minutes instead of days, according to McKinsey research.
Self-service procurement value
Self-service procurement delivers value in several ways besides relief for procurement and finance teams.
- Negotiate contracts and costs with approved suppliers so your fellow employees don’t have to make those decisions. Volume discounts add up. And you can ensure that your company is doing business with suppliers that meet your ESG criteria. That visibility is particularly critical in global organisations.
- Your colleagues will be happier with a user-friendly experience that reduces support costs and ensures your spend goes where it should. It’s a bit of a carrot-and-stick approach. Users are much more likely to accept a new solution if it’s easy to use rather than forcing them to follow complicated procedures.
With a familiar shopping interface, users can easily search for items, create shopping lists, browse categories, and find what they need quickly. You can also leverage advanced capabilities for instances where there are requirements such as one-time delivery, accounting splits, and project accounting.
Higher compliance leads to using the preferred suppliers and negotiated prices. - You will have visibility into your indirect spend like never before. You can track trends and disruptions and use data to negotiate with suppliers for future contracts. With better data and deeper insights, procurement leaders will be equipped to make solid recommendations and demonstrate value to the C-Suite.
Purchasing and finance departments often prioritise savings and policy compliance over customer considerations. This is one area where the customer comes first. The best organisations put customers first, recognising the value of convenience and ease of doing business.
Self-service procurement makes empowered employees more productive and delivers better customer experiences. Embracing simplicity in the buying experience helps people work smarter and faster, allowing them to focus on their core tasks.
For more insights on procurement challenges, read the From Insights to Impact: Driving High-Performance Procurement report from Procurious and SpendHQ.
