E-procurement Challenges and Solutions

Digitally transforming procurement practices is at once the most significant challenge and opportunity for most firms.

Dashboards can rationalize and offer granular control of procurement within a firm, but they are only as powerful as the vendor data fed into their back-ends.

Vendors and buyers have different priorities, practices, policies, and needs that often creates delays and inefficiencies. These misalignments create situations that disrupt the digital flow with manual inputting of data and multiple junctures where documents need printing, signing, scanning, and uploading.

A digitally transformed e-procurement strategy is one that builds a single platform integrating supplier data from potentially hundreds of thousands of vendors with dashboards and portals allowing for supplier lifecycle management, contract management, purchase order process, and purchase requisition management.

Sophisticated back-ends connect to intuitive, easy to use, but powerful front-end UI's. A properly developed platform is one where everyone knows the status of orders and payments, who is responsible for what at which stage, what tasks are required to overcome bottlenecks, who can resolve problems, and more. 

Advantages

For firms that can overcome the barriers, the benefits of fully digitizing the procurement lifecycle, from purchase to arrival, are self-evident.

Orders and paperwork never get lost in byzantine systems, bills paid on time, everyone knows which the stage of the process any order is at in real-time, and who is responsible for each step in the lifecycle.

A fully developed and intuitive vendor platform provides the digitally mature firm with significantly more vendor options, flexibility, approval speed, transparency, and savings. 

E-procurement and vendor portals also make vendors responsible for their own data, both in providing it in the first place and keeping it up-to-date.

A well-designed portal clearly shows what documents are needed at different stages and how to connect their product catalogs, pricing, and discounts to the firms Master Vendor Data.

Furthermore, the portal provides vendors data and tools for inquiries or processes that previously required phone calls and emails. Ultimately, digital transformation means less work for everybody.

A well-designed vendor portal integrates all of the processes of the procurement life cycle in place before the first purchase order is placed

Counter-intuitively, digitally mature firms that have embraced digital transformation strategies are sending and receiving less data in the form of documents and communications than digitally immature firms.

Mature e-procurement platforms are places in which relevant files and date are uploaded once and then shared and displayed when and where it's needed anywhere on the network.

This stands in contrast to sending and forwarding documents being sent or forwarded to various people, uploading the same material to multiple portals.

Centralizing and linking B2B transactions across one e-procurement platform allows for a transformation in collaboration.

As seen with the growth of enterprise software like Slack and Trello, messaging and communications is currently one of the most innovative areas of IT development.

Vendor portals on one side and procurement dashboards on the other should be connected with messaging tools that move B2B communications beyond emails and phone calls. 

McKinsey research has found that firms that cultivate deep collaborative relationships with suppliers grow nearly twice as quickly as firms that don't collaborate.

Digitally Mature Procurement Lifecycle

Setting up vendor portals requires two distinct tasks, one on the back end and one at the front end.

Pre-existing vendors need to be reviewed to ensure there are no double entries and 'child' vendor user accounts are linked to the correct 'parent' roles. This ensures that existing vendors can enter and use portals without friction, confusion, or unnecessary re-registration.

On the front end, vendor portals​ should also be a platform to register new vendors easily. Facilitating easy vendor registration allows for enhanced vendor discovery, diversity, and risk management.

One way to ensure ease of registration is having a single standardized Terms of Use for all vendors. 

The portal should show vendors what suppliers know about them paired with the ability to update their profiles with additional information and documentation.

Relevant compliance, diversity, audit certification, or documentation can all be uploaded and added or moved into a centralized Vendor Master Data database.

After legal departments validate this information, inventory and pricing information can be linked to the vendor portal.  This is an opportunity to formalize diversity practices by expecting certification from groups like the Women's Business Enterprise National Council (WBENC) and the National Minority Supplier Development Council (NMSDC).

A well-designed vendor portal integrates all of the processes of the procurement life cycle in place before the first purchase order is placed. 

Relevant, regularly updated, and validated data covering everything from prices to certifications will already be in place. The workflow of the life cycle comes 'baked in,' with the relevant users on both the supplier and buyer side ready to be assigned tasks and responsibilities when the order is sent. 

Firms will have all the information necessary to pick the right vendor, pay them at the right time, and track the status of purchase orders.

After a purchase order is approved, both vendor and supplier portals should allow users to check payment status, shipment updates, and open disputes. Likewise, users on each side of the transaction should be able to communicate with their counterparts.

A secondary benefit to uploading data through portals is that it provides a data backup platform for both buyers and suppliers.

Performance Management

On the other side of vendor portals, digitally mature enterprise portals and dashboards offer qualitative and quantitative measurements about vendor performance.

Surveys and reviews can be placed in context to customized reporting tools, dispute claims, purchase order approvals, and scorecards measuring on-time delivery rates and other relevant KPIs.

Managers should be able to quickly understand and appraise procurement workflows of the entire procurement lifecycle.

Dashboards

Vendor portals significantly help manage vendor risks. Market risks, potential frauds, cost, quality, and delivery risks constitute the most common type of risks.

Centralizing and digitizing the onboarding process allows procurement managers and legal departments to see how much – or how little – they know about current or potential clients.

Compliance with vendor contract terms and conditions are built into procurement dashboards. 

Fully digitizing the procurement process shortens procurement lead times at digitally mature firms.

Powerful e-procurement platforms, paired with digital transformation strategies, allows for better long-term planning and increased awareness of average shipping times, prices, and expected inventory levels.

There is far less 'last minute' ordering with such preparation, evaluation processes are automated, contract negotiation is streamlined with readily available TOR, and technical specifications are on hand as soon they finalized. 

​Don't Get Left Behind

​Schedule a free consultation with Visichain to ensure your supply chain and procurement operations continue to evolve and remain competitive in today's dynamic ​environment.

Richard McGirr

Do you need to create value and deliver change in your enterprise?With Visichain as your partner, you can leverage over 1 million hours of supply chain transformation experience from some of the largest companies in the world.Visichain drives visibility, productivity, and efficiency throughout your entire supply chain.Supply chain visibility at scale is essential to your business. Starting with the production of products all the way through free on board receiving, your business needs real-time data to help you minimize risk, drive efficiency, and make better decisions.Visichain designs, develops, and implements powerful yet easy to use software. Powerful solutions crafted to help your executives and supply chain managers leverage multiple data systems to partner with sourcing suppliers in real time.When you're ready to kick your procurement transformation strategy into high gear, send me a message through LinkedIn.