By Daniel Ball, business development director, Wax Digital
As a new year gets in full swing, there’s no better time for businesses to refine processes in need of improvement, and procurement shouldn’t underestimate the power of bolstering its own processes. Any attempts to make buying operations smoother, more efficient, and cost-effective are likely to play a part in wider business success.
When it comes to achieving personal goals, the key is to break it down into more manageable steps, and the same is true in business. Here are some targets procurement should set itself to get 2020 off to a blinder:
- Get your contracts in order: The average organisation has 20,000-40,000 contracts, but what happens when the agreement needs to be reviewed or renewed quickly? How easy is it to obtain files regarding these arrangements as and when you need them? What’s more, businesses that are unaware of renewal dates or don’t have full visibility of supplier T&Cs risk putting themselves at serious financial and legal risk. Procurement teams should make a business case to introduce contract management software so that they have a single, secure portal that they can use to quickly access information such as expiry dates and service level agreements (SLAs). Not only that, the software will alert the procurement team when contracts are due for renewal, enabling the business to check if prices will go up and whether alternative suppliers should be found. The software is also crucial for verifying that contractors have the necessary certifications in place to ensure the business remains compliant.
- Stop late payments: UK SMEs with late paying customers now have to wait on average 23 days to receive funds, doubling from early last year, according to finance company MarketFinance. The government is cracking down on late payments to SMEs, for example by empowering trade bodies to highlight organisations that are good or bad at paying promptly. To ensure invoices are paid on time, businesses should introduce a system, for example purchase-to-pay software; which automates the procurement process from ordering products or services through to making the payment.
- Build better relationships with suppliers: Every procurement professional knows that supply chains can be complex and risky due to the uncertain economic landscape we currently operate in, particularly due to Brexit. That’s why it’s crucial to form close relationships with suppliers to mitigate the impact of unpredictable scenarios such as financial crises, weather disasters or political unrest. Using supplier relationship management software, the business will have a clearer view of the supply chain and is more likely to spot potential issues before they escalate into something catastrophic.
- Bolster digital transformation programmes: Businesses will only reap the benefits of new procurement software if it’s underpinned by a clear digital transformation strategy. We surveyed 200 senior figures across many businesses and found that 72% of procurement professionals feel that the training they received after new technologies have been implemented was insufficient. Procurement should consult with senior managers and the IT department when new technology is introduced. They should work together to embrace the technology and ensure all users receive the training and guidance they need to use it effectively.
There is a lot of scope in procurement to take advantage of technologies that digitise laborious processes and increase visibility on costs and operations. With some clear goals that aim to improve different aspects of buying activities, businesses can make 2020 the year they free themselves from the shackles of paper-based spreadsheets and supplier contracts and use their time to add greater value to the business.