5 Reasons Your Procurement Process Is Slowing You Down

If your procurement process is not working as efficiently as you want it to, you're not alone. Most growing companies face these challenges. And in this video, I'm going to walk you through five reasons why your procurement process is not running efficiently and what you can do today to fix it. Stay till the end and I'll share one bonus tip which most companies overlook, and solving only that would help tremendously with improving your procurement process. If you're joining me for the first time, welcome. My name is Sachin Sharma. I'm the founder of Procure Desk, where we have helped hundreds of companies improve their procurement process through automation. So let's jump right in. Problem number one, or challenge number one, I would say, is you do not have a process. It's a very common thing we see with growing companies. As they scale, they don't define a process for procurement. That means every department might have their own own process, marketing has their own process, sales or operations, and so on. And the challenge with that is you don't have a single way to do procurement, hence you can't control the process. A simple fix for that would be set up a purchasing policy where you define exactly how you would go about buying stuff, whether it is getting something approved or whether you need to issue a purchase order beyond a certain limit. Right. So that's step. Step number one. Challenge number two is you have a process, but it's not communicated. Your employees don't know about the process, so. Or you're not communicating enough. Right. So very common problem that we see in growing companies too. A simple fix to that would be making sure you are including your procurement process in your onboarding steps. When you're onboarding a new employee, make sure they know about the procurement process. The second thing you can do is make sure that you communicate often. And that can be done either via lunch and learn or like every quarter, you want to provide an update and so on. Right. So those things you can implement today to fix it. Now, challenge number three, why your procurement process is not working is you're not measuring it. You have a procurement process, but you don't know whether it is effective, whether people are using it. Right. So how much spend is flowing through your procurement process or how long does it take for a approval to be done? Whether it takes two weeks, two days, two hours, what is that? So a easy fix for this is setting up some basic KPIs you want to track from day one. That could be average approval time that could be spent under management. And that's, I would say, the basic two you want to start with when you're starting on your journey or measuring the process. So that's three. Number four is vendor consolidation. As you grow, everybody would have their own preferred vendor. Soon you would see that you're probably buying office supplies from five different vendors. And that is not effective because one, you have too many vendors and second is you are losing leverage in terms of volume discount, which you can get if you consolidate that. So an easy way to fix that would be let's look at how many vendors you have per category and then work on consolidating those vendors by figuring out one or two preferred vendors, vendors one being the primary, one secondary, and then reach out to those vendors to get better discounts. Number five is your process is not aligned with your stage. So what I mean by that, many companies start with the basics, email and a spreadsheet, right? Emails for approvals, spreadsheets for tracking the purchase request that you have placed. The problem is it doesn't scale. And over a period of time, spreadsheets gets outdated. People forget to put things in them, right? So you can't rely on spreadsheets because the data is not accurate. A simple way to fix that would be automate that process. You could just use something like a different version like a Slack Automation, or you could use a purchasing system like procuredesk to completely automate your process so that you can scale it along with your company, right? So those are the five reasons why your procurement process is not working and how to go about fixing that. Regarding the bonus tip I talked about. So one common challenge we see with many growing companies is they will adopt best practices from a procurement process standpoint and not aligning it with the stage where you are. So if you are a billion dollar revenue company, your procurement process is going to look very different in terms of the maturity versus you know, if you're a $10 million company, right? So your process needs to be aligned with the stage where you are. So for example, in the beginning stages you need simple processes. You don't need a complicated three step or a four step approval workflow. You need one or two at least to start with, right? So what we advise our clients is that when you start implementing a, or optimizing a procurement process, look at the stage where you are and look at whether that best practice is the best practice for your company at your stage, right? So make sure you align that and kind of go from there, right? So just to summarize the five things we talked about, you know why your procurement process is not working. You don't have a process. You're not communicating it well. You're not measuring the effectiveness. You have duplicate vendors. And number five is your process is not aligned as previous stage. So if you like this video, feel free to hit the subscribe button so you get notified next time when we release videos like this. Till next time, have a great one.