Transforming Procurement Teams into Procurement Rock Stars
Transforming Procurement Teams into Procurement Rock Stars
Purchasers within procurement teams are heroes. They are the lifeblood of every company and not a single organisation that relies on suppliers and subcontractors can function without them.
We can well imagine a situation when production stops because a vital part is not delivered on time. This can happen across all industries and it causes business disruption, financial loss, frustration and blame.
In order to make things you need to buy things!
Countless interactions with internal customers
A day in the life of the purchasing team starts typically with a purchase request. These come in from various requesters and through different channels. The worst requests are the ones that are given next to the water-cooler and are ’labelled’ as urgent. These are bad since important details may be missed out and usually these requests need, at a later stage, more internal clarification than the ones that come in automatically through MRP-run or are sent in written.
On average, one purchaser gets 10 requests per day which makes 50 per week. This might not seem a big number, but each request leads, on average, to 15 interactions and, in many cases, it can take more than a day to send out the purchase order to the supplier. Ten requests x 15interactions = 300 internal interactions per day with details that need to be clarified in order to release the purchase order.
Typical procurement interaction channels:
- Procurement requests on paper.
- Phone calls.
- Oral communication.
Most interactions occur before the purchase order is sent to the supplier (PO entered to ERP).
These interactions happen because purchase requests and approval flows are complex, and buyers need to transfer and match these with third party (supplier)offerings.
The supplier, at its end, needs to convert the received order to an internal sales order, a manufacturing order, or service task and ensure on-time and on-quality delivery according to the customer contract.
Besides request handling and releasing the purchase order, there are several other tasks that procurement teams need to do; these can be split between strategic or operational activities.
- Plan and run supplier negotiations.
- Decide volume allocation.
- Create and run RFP / RFI / RFQ events.
- Collaborate with other functions.
- Run and contribute to savings projects.
- Take part in new product /service development.
- Handle purchase requests.
- Release purchase orders.
- Get supplier order acknowledgments and confirmations
- Order T&L (transportation and logistics).
- Monitor and control inventory levels.
- Monitor supplier performance KPIs.
- Invoice handling.
- Provide status updates to internal stakeholders.
- Firefighting (in case of late deliveries or quality issues).
Depending on how teams are named, supply chain team, procurement team or purchasing team, then tasks also vary a bit. An overview about the differences between supply chain, procurement and purchasing can be found in the following blogpost: ‘Are You a Purchasing, Procurement or Supply Chain Manager?’
This list is certainly not complete, but it illustrates that purchasing is not just a service function that blindly fulfils requests. Instead, it needs to manage communication and work side-by-side with all other functions.
Three simple steps for the digital transformation of procurement teamwork
Digital transformation is a hot topic in board rooms and every single function currently has a digital strategy, or at least a vision, to become more digital in the future. The supply chain, including procurement and purchasing, is no different. While many process improvements focus on data and various algorithms, which help to make better decisions, the biggest digital transformation with immediate effects can actually be achieved with teamwork.
Focusing on topics like collaboration, early involvement, visual management and process overview can have an immediate, positive effect on teamwork and boost employees’ motivation.
There are three simple steps that procurement managers can follow in order to make digital transformations in procurement teams:
- Acknowledge the need for change and identify key areas; create a digital journey.
- Find out where it is possible to get quick wins and try some new solutions.
- Demonstrate results to management and fulfil, step-by-step, the entire digital journey.
Acknowledge the need for change.
- Why do team members experience stress and what causes internal frustration? It is not a bad idea to use 5 Why analysis in order to identify the true root cause. AllAboutLean.com has written a good overview about 5 WhyMethodology.
- What causes delivery disruptions and why do human errors occur?
Find out where it is possible to get quick wins and try out some new solutions
- As an example, it is possible to take a www.ProcurementFlow.com 14-day demo.
- All purchase requests can be funnelled into one board. Every requester will get an automatic status update and the procurement team can drastically cut manual reporting times.
- Assign tasks to team members and do automatic follow-ups.
- Use the procurement board for quick team meetings.
- All communication is captured, and everyone knows what the latest and valid information is.
Demonstrate results to management
- Savings, either hard or soft, should be presented to management.
- The procurement and purchasing team can spend more time on strategic work.
- The procurement team is an equal business partner to all other functions and should always be involved early.
- The team is more motivated and employee turnover numbers decrease.
Implementing new solutions, such as ProcurementFlow.com, and transforming purchasers into passionate team players is a paradigm change.This solution brings intuitive working ways to procurement and connects process with communication. This is a vital piece in avoiding delivery disruptions, managing interactions and changes.
Work management and collaboration tool
ProcurementFlow.com is an empowering, operational purchasing process enhanced with key procurement steps — such as keeping supplier-related information in one single SRM (Supplier Relationship Management) system and maintaining the RFI/RFP process. Collaboration between different functions is embraced and what is most important is that everyone in the team is always on the same page.