Understanding the complex challenges you must face
Poor compliance, complex supplier portfolios and belated visibility of actual spend are just some of the challenges to address. However, really smart procurement is as much about cultural change as it is about improving systems and processes. At its heart is the need to ensure procurement is well-aligned to the internal business unit customers – but also shows the collective impact of better practice.
It is relatively easy to employ technology to simply speed up procurement, using e-catalogues, purchasing cards, portals, e-invoicing and auto-reconciliations, but this does not wholly address the fundamentals of effective procurement.
Organisations typically have strong control on key strategic supplier negotiations, but there is often concern that the negotiated deals are eroded by non-compliant behaviours within the business. In addition to this, contract leakage and limited procurement control on less important – but often high volume – categories can together represent significant margin erosion.
Along with& large numbers of active suppliers, diverse materials and products, lack of transparency, and fragmented IT, the challenge becomes even tougher.