How do you achieve effective procurement by giving all departments the possibility to purchase directly, what the risks of such an approach and how can you reduce them?
Most mid-sized and big businesses already have a dedicated department responsible for providing a company with everything from paper to spare parts for production line repairs. Why would we offer to involve other employees in the procurement process?
Let us explain how you may benefit from this approach, what the risks are and how they can be mitigated.
Why involve you non-procurement employees?
When you allow non-procurement employees to take a direct part in the ordering process, here’re the gains you get:
1. Enhanced efficiency of the procurement department
The procurement department frequently gets ‘attacked’ with the questions of other departments on the order status, delivery dates as well as requests to change an order, etc. Involvement of non-procurement employees can help the procurement department to avoid spending their time on such low-value repeating tasks. And even in case an order requires approval from the procurement staff, doing so you decrease the time spent on order processing. It spares procurement employees from multiple clarifications of order contents and duplication of effort as they don’t have to re-enter the info received from other departments via email or internal system to fill in the order documentation.
2. Smarter purchases
When orders are made by people who need these products and services directly to use in their work, there’re more chances for smarter choices. End users are more likely to know what product model or brand will serve longer and better, won’t require costly rework, etc.
3. Reduced misinterpretations and errors
Misinterpretation and errors may appear when the order info is to come through several departments before finally reaching its destination – a vendor. Moreover, the procurement staff can often have difficulty understanding the characteristics of specific goods and materials. Allowing non-procurement employees to make up orders on their own, you greatly increase the chances that their accuracy won’t be damaged and the requesters will get exactly what they expected.
4. Informed vendors
Collaborative procurement allows for direct communication between non-procurement employees and suppliers, so it becomes much easier for the latter to get constant feedback from end users and understand what can be improved and how.
Fears about purchasing directly
However appealing, the idea about involving other departments in purchasing activities may provoke rather disturbing thoughts, such as:
1. It can result in maverick buying
The more people are engaged in the procurement process, the easier it is to lose control over it and face violation of company guidelines and policies, budget exceeds, etc.
2. It can distract other departments from their job
Employees from other departments may get distracted from their core responsibilities spending their time and effort on the extra procurement activities.
Fortunately, these are not the reason enough to abandon the idea about the benefits that the involvement of non-procurement staff can bring. There are ways to safely mitigate the associated problems with the right software choices.
How you can win with a procurement portal
One of the options worth considering is a procurement portal. A portal provides a possibility to enjoy the benefits while mitigating the relevant pain points you may face. It combines the functionality of a vendor portal and internal procurement software to allow smooth and controlled ‘extended’ procurement.
To prevent maverick buying, an eProcurement portal uses various mechanisms that ensure the centralized, manageable, and efficient purchasing process. It allows the procurement department to configure the workflows to the specific guidelines and rules of the business, thereby preventing the non-procurement staff from their violation while making orders directly, for example:
- The portal lets employees access only selected/recommended suppliers approved by the purchasing team.
- The portal allows employees to purchase only according to the agreed terms.
- The portal introduces access control with different rights for different employees, departments, and locations.
- The portal sets up an approval process for either all purchases or specific situations (e.g., budget exceeds) and departments.
- The portal lets vendors see only approved orders.
- The portal allows setting up spending limits and sending notifications about all budget exceeds to the procurement and financial departments, etc.
Intuitive user-centered environment
Easy-to-follow interfaces of modern procurement portals won’t require much effort, time, and long training to get into their usage.
It may be a good step to allow employees to take a direct part in a company’s purchasing activities in order to achieve more effective procurement and supply chain management.
A procurement portal serves as good assistance for such an approach allowing for guided buying to prevent violations of the company’s policies and easy-to-follow workflows that don’t require much time and effort to get used to. Moreover, it helps to keep a clear picture of the needs of each department and avoid confusion with future redistribution.
Yet, in no way we mean that eProcurement should replace the procurement department. Procurement employees organize and control the procurement process using the portal as a tool for that and get more time to focus on more important activities (for example, strategic sourcing) as well as avoid mechanical and time-consuming work of gathering multiple orders, combining them, seeing to their relevance and working as a service desk for employees afterwards.