Procurement – going frictionless
Blog: Capgemini CTO Blog
In the first article in this short series, we considered the challenges facing the procurement function, and also the changing nature of its role. This time, we’ll be looking at integrating it into a smart, enterprise-wide, digital model.
The Frictionless Enterprise
Let’s start with that very point. If procurement is to address its challenges and meet changing responsibilities, it does indeed need to be properly plugged into the organization as a whole.
But that’s not enough. It’s not just about procurement tapping into other business functions – it’s about all of those functions tapping into one another.
This is a concept that we at Capgemini call the Frictionless Enterprise. It’s an approach that seamlessly connects processes and people, intelligently, and as and when needed. Everything works together.
It’s an approach that dynamically adapts to the circumstances of individual organizations, and that addresses each and every point of potential operational friction – regardless of whether that friction is between individual departments, between functions, or apps, or data sources, or devices, or involving something else altogether.
Cohesion and improvement across the function
When the entire enterprise is smart and cohesive in this way, procurement becomes a constituent part of it, like any other. It may perhaps have been previously regarded by some as a backroom function, lacking glamor – but no longer. More importantly, when everything else, from finance through marketing to logistics, is working seamlessly, procurement can start to deliver far greater value than was ever possible before.
Intelligent automation and analytics can streamline processes, and save time and money across the whole function. Smart insight can deliver consolidation and improvement in:
- Demand management – request validation; purchase order processing; expediting, receiving, and returns; invoice exception management; and procurement support
- Intelligent sourcing – tail spend management; tactical procurement; strategic sourcing; category management; and contract and relationship management
- Supplier management – supplier performance; supplier enablement; contract management; compliance management; and supplier support
- Accounts payable – invoice receipt; invoice processing; invoice issue management; payment; and payables support
- Risks and insights – spend analytics; working capital analytics; risk management and compliance; market intelligence; and corporate social responsibility (CSR) and sustainability
When everything is smart and seamless, procurement ceases to be an operational function, and evolves into something much more strategic. It becomes predictive, responsible, and reliable, delivering actionable insight. It provides a dependable way to manage supplier performance, tailoring it to the needs of the business while ensuring that the suppliers’ own needs and expectations are also met. And it establishes a means of continuous feedback in contract management compliance and risk management.
In fact, several of these and other benefits are quantifiable. Working within an enterprise-wide digital model, frictionless procurement can:
- Enhance compliance and risk mitigation: smart, connected models can achieve over 90% procurement policy compliance, and deliver significant reductions in what might be termed ‘maverick spend’
- Increase productivity by up to 50%, by enabling changes such as automation of purchase orders and dynamic channel switching
- Deliver an unobtrusive user experience – because why should doing the day job be any less straightforward for someone than, say, shopping online in the evening?
- Enhance transparency and insights: when friction between functions and systems is removed, visibility can be increased across the enterprise, and across the supply chain in particular. This can deliver up to 26% identified supplier consolidation savings, reduce risk, and – once again – cut back on that “maverick spend”
- Start paying back promptly. We’ve seen reductions of up to 50% in back-office costs, and savings of 15% on spend
These, then, are benefits that can be achieved in principle. But there’s no substitute for practice. In the third and final article in this short series, we’ll take a look at some smart, integrated procurement implementations in the real world. The results are pretty impressive…
Greg Bateup has worked with clients to deliver business transformation and BPO services for almost 30 years. For the last few years, Greg has focused on the digital transformation of the source-to-pay function, and how organizations can not only drive efficiencies in the procurement function, but also drive compliance and savings.