Maximizing the use of procurement technologies

The Support processes serve to improve the productivity of the other two processes, through activities related to catalog, supplier and contract management.

When implementing these new Processes, it is important to prevent them from being executed by the same previous Procurement structure. In order to maximize the productivity of the area, it is necessary to restructure the way in which authority and responsibilities were distributed.

Typically, in a Procurement organization structured by functions, each buyer is responsible for the execution of activities in a specific group of materials or for a certain geographical location. For example, a Buyer A who is responsible for Procurement Raw Materials and performs activities of listing, searching for suppliers, negotiating, preparing, shipping and monitoring purchase orders and in some cases even monitoring the payment to suppliers of raw materials. Another Buyer B is responsible for the purchase of Packaging and performs the same activities, but with another group of suppliers and so on, there are buyers of Spare Parts, Services, Office Supplies, technology, etc. Each buyer is measured by the same performance indicators and their "driver" is to save and at the same time ensure supply in a timely manner.

New Processes require a New Structure. The alignment between the new processes to be executed and a new way of organizing people is key to the success of the area. Each Process must be executed by a group of people who have the necessary means to do it productively. The name that finally remains in the structure is variable, the important thing is that the responsibilities that each one will have in the execution of the new processes are clear (see figure 4).

Figure 4.- New Procurement Structure executing New Processes

In the new structure, those responsible for executing each process are in a different area and can focus all their time, effort and knowledge on improving their process more and more.

It is important that each area requires results in accordance with what is expected of the process they execute. Once an organization by Process is implemented, we must measure the results of the Processes according to the correct "drivers". We cannot expect speed in the purchase from Strategic Sourcing and we should not expect savings from Purchasing. Each Process is required to do what it was designed for and no more.

Alignment between Processes and Competencies

Just as each Process is executed by a different group of people, the profile of each of the positions in the structure must be different. We cannot pretend that someone with an ideal profile to execute the Supply process is the one who executes the Strategic Supply process and vice versa.

However, what can be done is to design a development program where the skills of the people who execute a process are developed so that they are capable of executing other processes. Typically, reorganization processes represent an opportunity for the development of the organization's talent because new skills and knowledge are required in people and whoever has these skills and knowledge will have a guaranteed career plan.

Figure 5.- People's profile of a modern procurement organization

We have to assign the responsibility of executing the new Processes to people who have the required competencies to do so, in this way we guarantee that the Process generates the expected results.

Alignment between Processes and the Technological Platform

Until now we have a few new Processes being executed by groups of dedicated and expert people in each process. With these bases we are ready to consider how we can automate processes and what tools we can give people to be more productive in their work.

Many companies that have gone through ERP implementation processes already have a tool that allows them to record purchase and payment transactions to suppliers. However, there are activities in the Procurement process that do not necessarily have the support of any module of these systems. To this end, companies that develop software and computer applications have increased the scope of these tools so almost the entire Procurement process can be automated. Obviously implementing them or not depends on the return on investment in these tools.

In figure 6 you can see the functionality that are typically included in the different modules of a procurement platform.

Figure 6.- Main functionalities of the tools that support each Procurement process

Just as we have said that there are specific competencies required to execute each process, in the same way the tool assigned to people must be able to support the process and provide them with the necessary means to execute the activities efficiently. Furthermore, mastery of the technological tool will become a key competence to develop in the staff.

The following table shows what could go wrong if we do not achieve an alignment between the components:

The evolution of the Procurement area requires the implementation of new technological tools. To guarantee the success in the implementation of these tools, it is necessary to ensure that there is an alignment between the Processes, Structures, People's Competencies and the Technological Platform. This alignment will make it possible to optimize the synergy between each of the components and ensure good performance in the Procurement area. The investments in these tools are significant, however, they generate a significant return on investment if their use is maximized according to the level of maturity of your Procurement organization.