Why Excel is failing you in Procurement?
Until recently Excel was the main tool for the procurement process - you could love it or hate it but not live without it. In many cases, it’s still the best option to get the job done. The smaller the company and the number of their partners, the more efficient it is to keep track of all the data in a few spreadsheets. But as the business grows, the formerly efficient system can become a nightmare with lost information, waste of time and all-in-all, a waste of money.
In this article, we unveil the ways Excel is failing you in procurement and what you can do to get your procurement process back on efficient track.
It’s not excel, it’s you
Don’t get me wrong - Excel is great! Many procurement departments love Excel and for a good reason. As previously said, when the business volume is low and the procurement team is small, a spreadsheet is the fastest and most comfortable way to rack up a few formulas and analyze a small to moderate set of data.
Excel also seems universal, as everyone knows at least a little bit about it, everyone uses it to some extent and the files are easy to explain. It’s also simple to create custom formulas for your specific needs and build exactly the system you need at that moment.
And if all else fails, you can just feel good about yourself and your impeccable spreadsheet-game. Nothing says “important professional” more clearly than the ability to draft up an impressive and complicated maze of a spreadsheet.
But as the set of data gets bigger, the once so simple solution suddenly isn’t so simple any more. Attempting to manage more complicated collaborations, different orders and extensive heaps of data with one-size-fits-for-all solution can end up costing more in errors, wasted time and of course, money.
The times, they are changing
As your company grows, procurement processes grow with it. At the same time, procurement is evolving altogether. Companies looking to stay competitive and productive, need to keep their procurement processes up do date.
Procurement is no longer merely a cost unit that accountants handle on dusty spreadsheets in the office back room.
Procurement is recognized as a strategic priority with a fundamental impact on reaching business objectives. Digitalizing procurement can lead to a 5-10% cost savings and a 30-50% increase in efficiencies.
The main reasons procurement should go digital, are directly linked to speed, efficiency and accuracy.
- Increase of data - the more information you need to handle, the harder it is to keep up within Excel.
- More simultaneous users - the more people need to work with the data simultaneously, the more room there is for errors. Information might get lost, duplicated or deleted and a minor typo can trigger a chain reaction of chaos. This can also lead to several versions of the same spreadsheet that don’t add up - if the duplication is even noticed at all.
- Entry and data errors - to err is human and it’s not a surprise that 88% of spreadsheets contain errors. Manually entering data is a major culprit and Excel can’t detect data inconsistencies, as many AI-based software can.
- Need to respond quickly - many day-to-day activities take a lot of handiwork with classical spreadsheets and that causes delays and inefficiency. In an automated software, you can approve requests and send replies with just a few clicks.
- Keeping everyone on the same page (but not literally) - in bigger organizations, many departments must have access to the same information and also keep the information updated at all times.
- Accessing timely data - spreadsheets don’t reflect the daily activities without additional effort. Updating progress information either isn’t done at all or constitutes tedious manual labour. The only efficiency in this is wasting employees time and demotivating them simultaneously.
- Connecting various sources of information - coordinating different sources of information has the same troubles as keeping the data up to date in general. It’s the type of job that robots actually should take over - and as quickly as possible.
So what to use instead of Excel?
If you’re looking for a step up from Excel, generic ERPs (Enterprise Resource Planning software) come to mind. Unfortunately, if something claims to do everything, it seldom does anything quite right.
In procurement, ERPs lack a few crucial qualities, that can become as big of a problem as the drawbacks of Excel.
- ERPs are not meant for purchasing - they’re mostly meant for core divisions of an organisation, e.g. finance, accounting, sales, marketing and even HR. Yet as far as purchasing goes, they mostly enable the user to send out a purchasing order and that’s about it.
- Custom development is expensive - developing a custom ERP for the specific organization is costly and means more headache and expenses on further upkeep. In the long run, a few well-selected and integrated specific tools will do a better job with less hassle.
- E-procurement modules are complicated and user-hostile - even if an ERP does have an e-procurement module (and that’s rare), they support limited functions and don’t give the boost of efficiency and speed you would hope.
Today, there is a wide variety of specialized digital procurement solutions that are all designed specifically to meet the procurement needs. Of course, every organization is unique to its context and operations, so finding a good match depends on really knowing your needs.
Here are some examples of procurement software and platforms that all have their specific strengths.
- Freightender - the fastest-growing e-procurement platform in logistics that makes freight sourcing processes simple and efficient.
- Kodiak Rating SRM - gives access to advanced supplier and sourcing analytic, enhances collaboration and enables to find the right suppliers;
- ProcurementFlow for teamwork and collaboration - simple cloud-based software for collaborating with business counterparts and potential suppliers, as well as amongst the team;
- Sievo for procurement analytics - integrates over 700 sources of data to give valuable insights into the spending and cut costs;
- Basware source to pay - promises 100% spend visibility and aggregation of financial data across your entire operations in one single platform;
In any business, choosing the right tools for business is a choice that can either pay interest or take a toll for years to come.
Minimize the chaos in your procurement lifecycle, reduce human error and keep your processes consistent with the right e-procurement software.
ProcurementFlow enables you to:
- Work simultaneously on the same task with the entire team;
- Track live collaboration feed - all the latest activities, questions, and comments in the same place;
- Communicate with internal and external stakeholders - send out emails and capture responses, so everyone on the team can stay in loop;
- Funnel request from different sources into one location;
- Manage procurement projects and see the latest status and assigned user at item level.
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