What to begin automation of procurement process with?

Author: Yanina Gavizha

«It is impossible to seat 
the person in the Formula 1 race 
car only because he has a driver’s license»

Many companies in the implementation of procurement activities were asked about automation. What to begin with? What to automate? How much is it?

The paradox, but often companies immediately want a “full automaton” of procurement processes and do not think whether it is necessary and whether people are ready to work in a new way.

Before the choice of IT solution it is necessary not only to study the vendors proposals, but also to create the specific list of requirements and key indicators of the effectiveness of procurement processes for your company.

There are several factors that influence the efficiency of automated purchasing processes, but first of all the company’s strategy is the main “foundation” in creation of automation.

Often we see that the strategies are more “nominal” in nature and don’t allow to create the road map for goals achievement. A correct and “live” strategy should contain not only commercial indicators, but also corporate ways to achieve the Company’s goals as a full-fledged and developing player of branch.

So, for example, if the Company and its strategy are aimed at the overall automation of all processes, then the automation of procurement activities should be a complex work taking into account of IT architecture and infrastructure. After all, the procurement process is one of the gears of the watch movement of the company. To run it, you must at least automate the financial function, accounting processes and contract work. Automation purpose is not to switch to electronic document management, but to reduce costs, strengthen internal controls, speed up the decision-making process and other.

Initiation of automation of procurement processes proceeds from company’s employees themselves more often, however TOP MANAGEMENT does not always support such projects, having put at the head of the angle of sale and service. Based on our experience, we will allocate the main reasons why projects on automation of process of purchases can seldom be met in total portfolio on increase in efficiency of the companies:

  1. Biased assessment of the current situation. It is difficult for the Company’s employees to “evaluate” the outside situation and to understand / accept mistakes that need to be corrected, including through automation.Decision: It is necessary to allocate the working group which will be engaged in the analysis of the current situation with providing observations and recommendations on a particular process. Diagnostics of the current situation can be carried out both by employees of the company and with the involvement of external experts who will be able to provide an independent assessment, recommendations and an action plan for improving processes. The results of this work are the basis for the formation of business requirements for the automation of business processes.
  2. Unjustified financing. Yes, the automation of the procurement process is not a direct channel for profit, but only reduces operational risks. However, in this case, it is possible to estimate efficiency of the project from the point of view of the received qualitative effect.

Yes, the automation of the procurement process is not a direct channel for profit, but only reduces operational risks. However, in this case, there is an opportunity to assess the effectiveness of the project in terms of the received qualitative effect.

Key automation effects:

  • Decrease in terms of work and processes performance in general: reports, analytics, etc.
  • Improved security: decreases risk of emergence of mistakes (the human factor is minimized)
  • Increase in efficiency and improvement of quality of the work of employees (decision-making speed, document flow standardization etc.)
  • Systematization of all information of the Company: formation of public registers, databases and knowledge bases
  • Increase in culture of the work of employees (existence of disagreements and the conflicts between participants of the process)

Decision: We suggest to use the project management for automation of process of purchases that will allow to create process key performance indicators and also it is correct to prepare the company for future changes. Detailed scheduling will give the chance to attract all interested parties, to create qualitative business requirements and to choose the most suitable software (both at cost, and by his opportunities).

Correctly built strategy – guarantee of successful realization of automation. But at the beginning of the article we said that there are also other factors which influence efficiency of the automated processes. In more detail we will tell about them in our next article.

Yanina Gavizha

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