Purchasing departments take on the challenge of adopting new tools and processes
A product of the internet age, purchasing departments have simultaneously invented their own roles and their own software tools. The continuous transformation of those roles requires purchasing departments, which act as communication hubs for internal and external resources, to call on internal and external users to fully adopt those tools. What are these applications? Who is affected? What are the processes? Why do they need to be fully adopted? Here are some ideas to help you take on this challenge.
In the late 1990s, a new department began appearing in companies: the purchasing department. While it was initially an innovation of car companies, the internet age brought about its wide adoption. In some companies, the purchasing department is just a support role; in others, it is integral to their business. In any case, the purchasing department is at the heart of the relationship between a company and its external resources. Over the last two decades, purchasing departments have not only found their place within their organizations, they have also created their own web applications or worked with software publishers to do so in order to help professionalize purchasing processes. While big challenges remain, the first one purchasing departments should tackle is the broad adoption of their process tools by both internal departments and suppliers.
Adoption of tools must be two-sided: purchasers and suppliers need to act in tandem
Over the last 20 years, purchasing software adoption has increased as purchasing departments have become more common. In addition, the software has covered more and more aspects of purchasing. End-to-end processes covered by purchasing platforms include source-to-pay, source-to-contract, and procure-to-pay. These communication and process tools help handle tasks related to suppliers—strategy, sourcing, bidding, contracts, risks, CSR, performance, litigation, forecasting, orders, inventory, billing, payment—as well as internal management tasks, like evaluating purchasing performance and tracking budget usage. Add to that management of supplier and product references, BOM, specific processes (APQP, PPAP, etc.), service purchasing, temp workers, travel, expense accounts, and more.
Integration with information systems: increased productivity, but limited flexibility
And what about integrating your purchasing tools with your company’s information system, you ask? While some purchasing processes can be implemented independently, today, adding a purchasing tool to an information system requires integration with an entire IT environment, which can be very complicated given our complex 21st-century companies created from mergers, acquisitions, and demergers. The challenge of integration must be seen through the lenses of processes and references, bearing in mind that while integration may help boost process productivity, it limits flexibility.
Why you need to adopt the right tools for an effective purchasing department
Adopting collaborative tools is a major challenge that affects supplier personnel just as much as personnel in your company’s various departments.
Adoption of new processes and tools should be at the heart of all discussions with internal departments, software publishers, and suppliers. Because of the broad functional scope of processes and the diverse groups of people to take into account, purchasing departments face an enormous challenge. Let’s look at the reasons why adopting purchasing tools is imperative:
- ROI: When calculating ROI while taking into account a percentage of target adoption, project ROI will plummet if adoption is not up to snuff.
- Collaboration: By nature, purchasing is a collaborative role. If other departments don’t adopt these collaborative tools, their impact on company performance will ultimately be limited.
- Operational excellence: A digitized, end-to-end process helps you achieve the operational performance needed to be globally competitive. A failure in software adoption is equivalent to a defect in production and is all the more costly when the organization has already moved toward digital processes (non-standard process, lack of resources, etc.).
- Risk management: Supply chain complexity and more regulations at the international level have made it necessary to digitize risk tracking. As such, only total adoption will respond to these needs.
Your supplier database must become a company asset, just like your client list
What matters, of course, is to figure out how to respond to the challenges of purchasing software adoption. Everyone has been hard at work on these issues: purchasing departments have been constantly challenging and reinventing themselves; consulting firms have been developing new methods based on user feedback; software publishers have been working on their user experience and innovating with artificial intelligence and recommendation engines; IT departments have been implementing conversational agents.
The keys to a successful digitization of the purchasing department
- What’s in it for me? The different groups of people asked to collaborate on a purchasing platform may find it hard to see how it benefits them personally. Clearly defining the benefits for each type of user, including suppliers, is key to adoption.
- What about indicators of success? Amazingly, it is very rare for quantifiable key success indicators to be defined during project implementation. All you usually get are commendable declarations of intention. Taking the time to come up with these KPIs is a necessary step at the beginning of the software adoption project. The indicators should then be adjusted as the project evolves.
A few things to think about to dig deeper…
- A vision: Digitizing processes and getting them fully adopted will make purchasing an essential department with an asset that adds value to the company: the supplier database.
- The means: Can establishing a cross-functional, continuous adoption project supported by a dedicated cloud platform help carry out the transformation across all users (on-site and remote workers, as well as suppliers) in a smart way?