2020 was a year businesses had to rethink their strategies and switch to more digital solutions, whether for communication, sales, hiring, etc. We also experienced a boom in B2B services that flooded the internet with “solutions” for companies everywhere. Many of them are valid, while others are not, but figuring this out can be tricky. What’s more, with budgets often being decentralised, handled by different departments with multiple decision-makers, software subscriptions were being bought left and right. Resources run dry when rogue purchasing and the lack of transparent systems meet. So, how can companies kick this money-losing practice?
How analog service procurement systems are flawed
Comparing your service providers without the help of digital solutions poses a substantial challenge for companies. The lack of data, the limited amount of potential suppliers and the difficulties assessing the budget fit can lead to wrong decisions and missed opportunities. As services are naturally problematic to compare, it is crucial to get full insights and back your decisions by data retrieved from past procurement events and valuable feedback from other stakeholders along the procurement process. Based on research by McKinsey & Company, indirect procurement is changing rapidly, enabled not just by new technologies but also by a radical new understanding of the value it can generate. Given the current business environment, companies need to adapt quickly in order to create sustainable competitive advantage and procure more efficiently. The future of indirect procurement will evolve around digital cutting-edge technology and consist of 6 crucial elements, as can be seen in the visual.
Below, we want to point out 3 tricks which can help your company to drive its performance by procuring services more efficiently, implementing the needs for a revolution in indirect procurement.
1. Collaborate more efficiently
Analogue service procurement limits the possibility of sharing data and insights with all stakeholders involved and therefore harms the speed of operations. According to research conducted by SAP Fieldglass and Oxford Economics, these are reasons why maverick buying and unauthorised spend still remain key issues in service procurement. Allowing for sharing data across all stakeholders could help procurement functions to increase transparency regarding spend management and supplier collaboration. In turn, this increased agility could drive the performance of the function, as Pierre Mitchell, Chief Research Officer at Spend Matters, states that "agility is no longer a buzzword, but a business necessity, and leading the CPOs are showing the way." Enabling a clearer collaboration will increase the awareness of spend importance across the departments and therefore increase the importance of procurement as strategic business unit.
2. Process transparency is becoming more important
In order to comply with the rules of each individual company, it is mandatory to make your processes as transparent as possible. The processes involved can be related to choosing the right supplier, sharing data within the company or spending. Implementing a system which ensures transparent processes and consolidated real-time analytics. An easy way to ensure being in line with compliance rules is setting up standardised and automated processes, which consequently do not have to be checked each time anew. Companies making full use of transparency analytics further benefit from easier identification of savings potential amid all the data which is being collected to enable transparent processes.
3. Improve comparison of service providers
Companies often lack the data about all the service providers available and therefore collaborate with only a handful of the same providers, which are already onboarded and proven. However, companies lose the possibility of increasing their supplier base and driving the performance. In order to facilitate finding the right supplier, it is essential to set up your individual success criteria. As a result, companies can better compare the options available considering their pre-defined needs. Digital procurement and scouting tools additionally allow you to find new suppliers which fit your success criteria and match your project needs and make them submit standardised proposals which are easier to screen for the best option.
Make sure you procure your services more efficiently
Adopting new technological solutions can help bring your service procurement to the next level. According to McKinsey & Company, managing the transformation to digital procurement can save your company 3-10% of the overall spend. Most importantly, it will be crucial for companies to stay competitive in the market, as competitors don’t stay still and will try to make the most out of these trends as well. A new vision for indirect procurement is needed in order to maximise the value creation and technology needs to be used to complement the traditional core tasks of the procurement department.
Being up to date when it comes to keeping up with new technological opportunities can help improve your company’s indirect procurement significantly by enabling a better comparison of suppliers and digitising the full workflow. Mercanis helps you unlock the full potential of your service providers. Find the perfect supplier for your needs, energise collaboration across your company, while digitising your sourcing process end-to-end.
Book a demo to make the most of your service procurement or get in touch with us to talk about your specific needs.