The way how procurement is seen in an organization depends on the scale and complexity of the business, industry and many other factors. It happens that procurement is a part of an admin department, sometimes procurement teams report to the CFO, sometimes to other managers and sometimes they are independent units. This is the reason why procurement is seen differently in various businesses. Although the procurement competencies change dynamically, there are still a couple of myths about the procurement.
Myth no. 1 Procurement cares only about savings and cost cutting.
Myth no. 2 They love Excel and don’tt see anything else.
Myth no. 3 Procurement teams are not creative and innovative.
And here are the facts. According to one of the consulting companies research 50% of CEOs have no idea what a procurement team really does. According to another survey 58% of CEOs think that procurement is uneffective and needs to be re-organized. How to change this attitude and debunk the myths? Procurement software and online auction platforms may be a perfect solution in that case! Not only do they support procurement teams work, but also they bring a huge value to the C-level employees.
Here are 4 ways to convince the Board to invest in procurement software.
Show the money
Although CFO and CEO priorities constantly change and innovation is in the top 5 key tasks, company financial results (including savings) are still no 1. To convince the C-suite to implement procurement software you should really show them reliable statistics and reports. How? Procurement software implementation experts will help you estimate the savings or you can check some case studies and see how other companies succeed in investing in procurement software.
Follow best-in-class companies
Board members want to be leaders and follow the leaders in their area. All companies from the Fortune 500 list decided to invest in online auction systems and noticed savings up to 15% on the acquisition of goods and services and procurement cycle time was decreased by 90%. Procurement platforms with online auction module will be a great solution.
Suppliers impact on a company image
A company image is one of the management priorities as it influences on brand awareness, development and how the product or service is seen and, eventually, on the revenue. Companies such as Danske Bank or RBS publish supplier selection policy on the company websites and invest in sourcing best suppliers. This process will be essential in the industries such as retail, manufacturing, cosmetics etc. Procurement systems enable creating supplier evaluation tables and adding specific questions when sending RFx (regarding CSR, company policy compliance, certificates, ecology etc.).
Transparency and compliance
According to Forbes transparency has to be built on every business level, the sooner the better. Entrepreneur published 5 examples of companies succeeding through transparency. The board role is to take control over most relevant processes in a company. In large scale businesses it’s extremely difficult, but still crucial. Procurement systems streamline information flow, process control and communication.
Certainly, every business is different, has various needs and different ways will be effective, but hopefully we inspired you!
