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 are the gains you get:
1. Enhanced efficiency of the procurement department
Procurement teams frequently get ‘attacked’ with questions from other departments on order status, delivery dates as well as requests to change an order and so on. The involvement of non-procurement employees can help professionals to reduce time spent on low-value, repetitive tasks. And, even in cases when an order still requires approval from the procurement staff, this still decreases the time spent on order processing. It spares procurement professionals 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 into an 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, it’s more likely they’ll make smart choices. End users are more likely to know what product model or brand will serve longer and better and won’t require costly rework.
3. Reduced misinterpretations and errors
Misinterpretation and errors may appear when the order info comes through several departments before finally reaching its destination – a vendor. Moreover, procurement professionals often have difficulty understanding the characteristics of specific goods and materials. Allowing non-procurement employees to complete orders on their own, greatly increases 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 that are engaged in the procurement process, the easier it is to lose control 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 reasons enough to abandon the idea and forget to acknowledge the benefits that involving 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 a centralised, manageable, and efficient purchasing process. It allows procurement departments 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 or training to get accustomed.
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 provides good assistance for such an approach. It allows 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 do we mean that eProcurement should replace the procurement department. Procurement employees organise 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.