How to accelerate decision-making in the procurement process?
Accelerate decision-making in the procurement process is not just about speed of execution, but also reliable data to help inform it. It is not only a matter of deciding quickly, but also deciding well. This means clear and transparent information is needed, with fluid information flows and high quality information injected into the information system, as well as making sure that the different departments are all working to build perfectly-dimensioned calls to tender. Speedy decision-making is a major competitive advantage for the whole business and a means by which to boost overall performance. Bertrand Gavroy, Pre-sales consultant at SynerTrade explains how to create the conditions for this success, and how an eProcurement solution can help in the process.
General principle: speeding up the steps prior to decision-making
It is not the actual decision-making that slows things down, but preparing for it. It takes time to collect, inject, clean and check data. Erroneous or poor quality data brings with it a high risk of working on unreliable indicators. Quality largely depends on the rules established to enter the data for analysis, and is dependent on systematic entry and homogeneity of form. This is the only way that the dashboards can be used for decision making.
Taking time to reflect in advance also has an impact on the content of the dashboard. Only the data that is essential for the decisions to be made will be produced. They say that too much information is equal to no information. This is also true for the decision-making cycle. Decisions are always made more quickly when more pertinent criteria and less data are used.
The form of the data is also important. Not only does the data collected need to be homogenous, but external data injected into the system needs to be combined or added to the internal data in a coherent way.
If, for example, the objective were to reduce the supplier panel and dereference a certain number of suppliers, it would be necessary to make sure they are not under contract or that the contract is about to expire. It would also be necessary to check their products could be substituted by other ones.
Reducing the supplier panel is also an opportunity to dereference suppliers that no longer match the business’s CSR or quality criteria.
This type of broad evaluation requires centralizing data from the contract base, assessment data, spend analysis per supplier and identified risk areas.
Processing this amount of data manually would be extremely time consuming, and there would be a risk of not getting it done in time to exit contracts that are automatically renewable. Now you see why an adapted eProcurement solution is so valuable.
Setting a smart framework for data analysis
Once all the data is collected, you need to set a well-defined analytical framework:
- identify procurement categories in which suppliers are expiring;
- of these suppliers, examine the ones that present a risk (dependency, financial health, brand image);
- observe and analyze the orders made and see if grade A suppliers supply equivalent products.
If you follow this order from top to bottom you will protect yourself from dereferencing a supplier with a 5-year contract! We have called this approach DAR, or Dashboard Analyze Reporting. It ensures a methodic preparation process for decision-making, by dividing up the activities related to this process, and is based on a culture of high quality data and transparency. Telling an employee that the data they have produced is not compliant is not a problem if, as we have seen, the approach and practices established are transparent.
Cultivating a demand for high quality data also facilitates group decision-making, with a clear and identical frame of reference for everyone involved. The figures need to be accepted by everyone, and leave no space for contention.
Promoting co-production through establishing synergies with the procurement department
With the best tech solutions in the world, full progress cannot be made if the human factor is not planned correctly, with employees involved according to their own added value. There needs to be a clear data system for everyone, and everyone needs to get involved in maintaining highly-precise data entry. This aspect represents an excellent managerial and motivational opportunity: because of the extensive work on decision-making cycles, the mission’s transversal structure and individual contributions are valorized, and employees outside procurement can feel fully implicated in the business’s performance. These are things that workers, especially young graduates, are looking for in their jobs. So you will make your business more competitive while improving your employer brand and boosting the collective nature of the business.
Speeding up decision-making for procurement is not about ‘being quick and efficient’. It means combining the abilities of the procurement solution with the added value of employees. By promoting the use of an eProcurement solution in your business and emphasizing data quality and preparation, you can gain a competitive advantage by streamlining the pool of suppliers. You also boost performance indirectly, with teams that are focused on the tasks that require their specific skills and creativity. A double win for all businesses seeking out supplementary performance levers.
Bertrand Gavroy - Pre-sales Consultant at SynerTrade
Bertrand Gavroy - Pre-sales Consultant at SynerTrade