Doug Fullenkamp, director at Insight Sourcing Group, looks at how new technologies are shaping the function and what people should do to manage them and get the most value out of them.
While the title of this article may be a bit harsh, I’ll bet it strikes a chord for most procurement professionals charged with creating greater efficiency and value within their supply chain or procurement organisation.
Raise your proverbial hand if you have implemented the latest and greatest technology only to realise your worst fear: a lack of adoption.
With the promise of new and better procurement technology at every turn, we optimistically dive head first into a procurement transformation with the hope that it makes an impact on bottom-line savings, increases inventory turns, decreases maverick buys, reduces supplier risk, improves compliance to existing agreements and increases spend visibility. At least, this is the promise of the countless Procure-to-Pay, eSourcing, catalogue management, contract management and spend analytic solutions.
If you are even more optimistic, you have begun to explore the potential advantages of Big Data, the Internet of Things, and Machine Learning with the hopes of furthering your strategic advantage over your competitors.
These are all noble goals and certainly worth pursuing. However, there is no easy button or silver bullet.
While all of this technology can be powerful and take your procurement function to the next level of maturity, it is only successful when complimented by good, old fashion human intelligence.
Here are some key things to consider when adding, using or replacing existing procurement technology.
We are all guilty of blindly following our GPS systems I once found myself unwittingly following my GPS to the base of a river waiting for a ferry line to take me to the other side. However, there was a small problem, the ferry was shut down due to bad weather and I was late to my appointment.
If I would have taken the time to view the suggested GPS route, I would have realised the flaw in the computer logic and could have avoided the mistake and made my appointment on time.
The same could be said for spend analytics systems. If you blindly follow UNSPSC or SIC codes, you may unwittingly develop a spend cube that requires extensive rework every time you prepare for a sourcing event. If you fail to do the rework, you will likely pursue a negotiation strategy which limits the potential competition by including too many or too few suppliers or leaves out segments of relevant spend.
Therefore, take the time to view the route. More importantly, know your destination.
More astute procurement professionals may be compelled to move towards more sophisticated technology which may be overly complex for the issue you are trying to solve. If you are trying to get adoption across your organisation versus a subset of power users, then make sure your specification is fit for purpose in order to maximise the impact across the organisation. Broad adoption is highly correlated to ease of use and buying a “spreadsheet on steroids” will likely mean you need an analyst to answer every executive’s question about your procurement spend.
One of the great challenges procurement leader’s face is that they are often compelled to use procurement tools affiliated with their ERP provider. Most of these tools were born during the days of “Feature Wars” where more and more complexity was added to the tool until it became almost unusable without heroic manual effort. Where leaders have the influence to pull it off, they should explore best of breed, built for purpose tools.
When you go to a procurement technology conference or begin to engage technology providers (assuming you have decided against developing a solution in house), you will find a host of providers ready to support you. It is easy to get overwhelmed and confused. Consider testing your technology provider on their level of expertise in procurement. Surprisingly, few architects of these technologies have a procurement background and their “academic approach” is often reflected in the tools which may work perfectly in theory but struggle in the real world.
Procurement technology can provide dramatic improvement to an organisation. However, without the right level of human guidance, your technology might lead you into a river.
Doug Fullenkamp is a Director at Insight Sourcing Group, the largest strategic sourcing and procurement services firm in North America. Doug has over 20 years of experience in procurement and sourcing both as a consultant and within industry
This contributed article has been written by a guest writer at the invitation of Procurement Leaders. Procurement Leaders received no payment directly connected with the publishing of this content.