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Non-value adding procurement practices usually die hard but can be made to die quickly

In my almost 20 years experience, I have worked with multiple stakeholders (clients, suppliers, prospects, internal team members etc.) while executing Sourcing & Procurement related projects. One of the things that I found common across multiple busines verticals was the relatively slower or inactive state of response to modify a non-value adding Sourcing & Procurement processes like purchasing mismatch errors resolution (errors between Contract, PO, Invoice, Payment); following up for obtaining PO amendments; getting quotes on non-structured RFP templates; working with unclassified spend data (e.g. 9999999 item code; non standard item descritions etc.). The other thing that used to surprise me was what I call as the "high tech buy - low tech use" syndrome prevelant across many of the organizations. What this simply means to me is that organizations will buy best of the breed ERPs (say mySAP, Oracle), procurement applications (say Ariba Sourcing Pro, Ariba P2P) at a very high upfront price with long term maintainence and product support contracts, but use just 20 to 30% of their features (e.g. not creating Contracts within ERP but in papers; not leveraging category management workflow capabilities of Ariba Sourcing Pro but just conducting RFIs and RFPs). So I have often witnessed CIOs, CPOs, CEOs presenting proudly that Ariba Sourcing Pro has gone live during last 1 year successfully without even mentioning the adoption rate of its total features.

A seminal quote came from Albert Einstien who paralleled insanity with doing the same things over and over again and expecting different results (e.g. how do we get higher ROI from our investments is still an undisputed goal for any organization but while continuing to work the same old, less efficient, effective or best in class way). One thing leads into another is an old adage. So what seems to be a common, unsolveable problem continuing due to lack of attention, rigor, investment or all of these, is often a business expertise area and model for procurement BPO service providers. Ask anyone of them and they will provide you N number of case studies, approaches and frameworks to not only transform/modify such situations but also add significant value (e.g. sourcing savings, compliance savings, risk reduction etc.) in the procurement performance. I have myself conducted a number of diagnostics, designed solutions, supported stakeholders to implement as well as proudly measure and report these regularly. I do believe that this assesment can be and should be started anytime, in any country and at whatever stage of Sourcing & procurement maturity a firm is. Like mining, one can always find some new oppurtunities everytime one mines. Anyone wants to support or negate the view?

Comments

The modification of an existing process or the addition of a new technology parameter requires effective change management. Many times, the buy-in and training of the stakeholders involved is not given the required due which leads to lesser than 100% adaption of the new process/technology.

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