5 Ways to Get the Most ROI from Your Procurement System

So do you know most companies that invest in procurement Systems only utilize 30% of its capabilities. In this video I'm going to cover five strategies that you can use to improve the ROI that you're getting from your procurement system. Whether you are a cfo, controller or accounting manager of a growing company, you can use these strategies to convert your existing procurement investment from a cost I would say necessity, costly necessity to a into a strategic advantage. And stick around the end where I will reveal one simple strategy that you can implement to reduce the time on invoice approvals and close books faster. Joining me for the first time, welcome. My name is Sachin Sharma. I am the founder and CEO of procuredesk where we help growing companies spending by automating their purchasing and AP processes. So let's jump right in. One is aligning your system with your unique process. So when we implement or a common mistake we see making while implementing procurement systems is that they take their existing processes and force it on the new system or they take what they got out of the box and implemented as is as best practices. And in my experience and opinion both of these approaches are not right because sometimes you have your unique processes for a reason and sometimes you just need to change something. So really the right way or strategy to fix this is to create a cross functional team to assess your unique process needs. Do you really need an approval workflow that four people need to approve something before you make a purchase? Or maybe you want to speed up the process for let's say marketing team because they continuously put in requests for advertising spend and time it takes to get approval done is really is a showstopper for them. So these are your unique needs. So really what you need to do is relook at your approval process from your okay the needs or what are the objectives we're trying to drive and then implement that in the procurement system. Number two is in strategic training, this technical training. What we see is training is more focused on how to click buttons in the system here to do this, click here to do that. And most companies companies fail to employees on the why behind the system change, right? Why we implementing it, what are the objectives, how what role they play system and so on. So the approach here is to focus more on you know why explaining the need for the system but then making your structure based on the role of the employee. So if your role is to just go in and do approvals, you really don't need to sit through a half an hour training to understand how to create a purchase request. As an example, so focus on the different groups that need training. So focus on the why and then focus on specialized training based that. Number three is what matters, right? With smart KPIs. So one of the challenge with the procurement KPI is once you implement, you don't know how efficiently it is working for you. Whether any room for improvement or is it working the way you desire it to work. And a simple way to fix that is to understand some of the key KPIs on the process side. So what do I mean by that? So think about how long does it take for an average approval cycle time it's happening under 24 hours or some requisitions are getting stuck for more than that. Maybe there is one person who is always taking more time for approval or they might need more training and they are kind of processed. Right? So easy way to do this is in your procurement system. Create a dashboard that gives you a overall view of these key KPIs so you can easily review it on a monthly basis and see if the process is working or if anything needs to be tweaked. Number four is do a phased rollout strategy. Now in my experience we do roll out of procurement systems. There is always like set of people. There is which is around 60% one care one where other they will just go with the flow, use the system. There is 20% who are your champions? They are, they love the system and they tell everybody about how great the system is. And then the remaining is detractors, right? The remaining 20% who are never happy. And that just is so the best way to do, you know in any large scale organization I would say is break it down into these phases. Like you want to focus on your friendlies, that 20% what you think are champions, bring them in, show them the product, get the feedback and then exit before you roll it out to the larger organizations. In my view or experience, you get one time to roll out these systems. So taking time to understand what is the unique requirements and testing it. Getting feedback before rolling out serves in a long way. Number five is continuous improvement. Companies implement the system, never update their configurations or look at the new features that has been released. Never change the processes we recommend is every six months look at it and say all right, is our process working? Is anything broken, a vendor release, any new feature that we can leverage to make the process better and so on. So you might want to implement a suggestion box where you are getting feedback from employees to see, you know what are the areas where they actually need more improvement system is working where it's not working. Right. So those are the five strategies. Now I mentioned a bonus strategy and let's talk about that. Now you all know about automated three way match. If not, there's another video we'll link to that which gives you the ability to match the purchase order receipts and invoices. The problem with those is even if there's a small deviation between these three documents, the system is going to send it for approval. And that is a lot of approvals. Especially your pricing is not fixed and so on. And the pricing is fluctuating. So the way to solve for this is implement what's called tolerance levels within the organization where you could just say within a tolerance for probably a specific supplier or a specific category. You're okay to approve invoice if the even if there is a mismatch and if it goes above that tolerance level only then you should raise it. So what this does is, you know, it's the minor changes which has minimal impact, slows the process, right? It speeds up the process and you can close books faster. So here's a quick recap of what we discussed today due to your process. That's strategy number one, teach them. The number three is measure what matters. Number four, roll it out in phases. And number five, keep improving. 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