Disruptive Procurement – 2019 & Beyond

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Procurement in 2019 and beyond - the turn ahead!

(Procurement Professional as a word below refers to Sourcing & Procurement professionals in the article below.)

How do you as a Procurement professional feel when the internal stakeholders pushes for a faster execution than agreeing to your Six or Seven step Sourcing process? Upset and Unsettled?

What happens when the Scope of work is not fully defined and the business partner says that this is what I can tell you as I also know this much. The expectation is that you should start the sourcing exercise with the limited scope only. Don’t you as a Procurement person feel disengaged and Confused?

Upset, Unsettled, Disengaged, Confused– These are some of the feelings that a Procurement professional feels many a times, irrespective of Level in the organisation, Industry they are working in, Maturity level of the Procurement function etc.

So, doesn’t these feelings show a wave of Disturbance? This disturbance is what, if managed well can result in to what is call “Disruption“, which in common english means: disturbance or problems which interrupt an event, activity, or process.

Disruption, the buzz word for last 5+ years across the globe resulted not just creation of new industries, new ideas, but has been received well in the processes that run any organisation. When it comes to the Procurement processes, procurement professionals, vendors and some internal customers have seen it happening in their organisations and many still are guessing what is Disruptive Procurement. For those, who do not know what all has happened or can happen in this domain can relate to Disruptive procurement by understanding and relating to the below examples:

  • Robotic Process Automation (RPA)– The use of robotic process automation (RPA) in procurement is nascent but the best place to start is with repetitive, time-consuming, lower-value processes. Adoption of RPA can not just result to faster turnaround time, it can give procurement organisation a well deserved Customer Satisfaction score. Some of the examples in RPA include- Approval of Purchase Requests and auto creation of Purchase Orders. Other example is automated approval on Invoices when submitted by suppliers, where a Bot will authenticate the Invoice against the Purchase Order and will process if it found correct as per the rule.

So, how big is the opportunity through RPA in Procure to Pay process?  Genpact estimates 70% of a company’s manual processes can be automated, netting massive business gains by freeing employees from doing repetitive, low value tasks and moving on to more strategic, value-add projects.  It may sound alarming, but Forester expects that there will be more than four million robots running administrative related tasks in the next three years.

  • Consolidate Maverick Buying– Now this is something, which very few companies have implemented. Almost every organisation that has smaller office across cities in a country end up creating Purchase orders to release payment for the utility bills. This is something that they do every month. Have you ever thought of finding an agency, who pays on your behalf in lieu of small service charge (say 3- 5% of value)? This way, you can do just one Blanket Purchase Order with this partner who will keep paying on your behalf month on month. Not just the utilities, the vendor can be used for one time purchases for smaller amount also. And, when you find something at a very attractive price on Amazon or any other e commerce site and want to buy that for your organisation such vendors can be put to work to buy the item for you and charge management fees.
  • Quick RFPs– Organisations are moving to the direction where they float the RFP using the tool to multiple vendors and ask them to respond in 3-5 days against 2-3 weeks of standard RFP timelines. How are they able to do this? Simple, it happens. Just that none tried it till date. What was changed was the mindset and risk taking attitude. Suppliers initially resist to such timelines, however end up doing it as they don’t want to lose the business and want to work with the speed of the business.

So, what is needed to do Disruptive Procurement?

Not much, but just a challenging mindset and a risk taking attitude. Try it and you will see the difference.

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