Sachin Sharma audited 100 mid-size companies and found three problems: spreadsheet-based purchasing breaks around 40 employees, departments buy from duplicate vendors and lose negotiating power, and spend visibility disappears until month-end. Small purchases slip through while large ones stay controlled.
We recently completed an audit of 100 companies between 10 to 100 million in revenue to understand how they are dealing with their purchasing process. And we found some interesting findings which I'm going to share in this video with you. So the top three findings of that survey and I'll also share towards the end, one thing which we were not expecting to see, but we saw it across all the companies. Right. So if you're joining for the first time, welcome. My name is Sajan Sharma. I am the founder of Procure Desk where we help growing companies with spend control. So finding number one, they have overgrown their current purchasing process. Surprise, surprise. When you're small, you have lower volume of purchase. Everybody knows what they are doing. As they grow over, I would say 40 employees is when they kind of lost control over their purchasing process. So spreadsheets that used to work for tracking purchasing doesn't work anymore. It's outdated or, you know, spend is not under control anymore because people have credit cards and they're spending left and right. So just challenging from a spend control standpoint. And honestly, this is not a failure. Risk is success. Right. Because your company has grown. That's why these are growth problems and good problems to have. So what they are doing right now is they are implementing better controls from a process standpoint. So a purchasing system that can capture all the requirements from different stakeholders and then a process to make sure they are reviewed and approved by the right person. Right. So kind of having a basic process in place which scales as they scale the organization, number two is what we found. Departments takes more ownership and that's a problem. So what do I mean by that? So every department start doing their own purchasing as they scale and they feel probably they're doing a favor to the company. Right. Because I don't need somebody to be involved to help me with purchasing. What lands up happening is you have many vendors from the same product you're buying. Like one company we work with, they were, they had like three different vendors for project management software. And when we kind of helped them with consolidation, they kind of looked at and said, all right, we don't need these three software. We just need one vendor. And every department, whether the sales, marketing or production, can use the same vendor for project management. So what they're doing now from a policy standpoint is having a person review the spending so that they can centralize the purchasing and make sure they're buying from fewer vendors and getting better pricing. So this is kind of, you know, two benefits they're getting. You have lower I mean, fewer number of vendors and you're getting a better pricing for your product. Number three is losing visibility with scale. A very common problem is as you scale, you start losing visibility into what's your total spend because you have to wait for your month end process to close, your books to close. And even then the visibility is at a GL level. So we ask many companies on how much are you spending on software? And many people have estimates, they don't know exactly how much they're spending on software because there's no real way to do that. So a solution to that problem is having a granular breakdown of spend at the time of the spend so the person who is spending can categorize the spend and say, all right, this is software, this is hardware and so on. So when you're running your spend analysis, the GL structure is okay from a cost standpoint at a PLN level. But beyond that, if you want to understand exactly where you're spending money or have better discussions with your stakeholders, you need that granular visibility to do that. Right? So those are kind of three things which we saw now coming to the bonus. I would say bonus tip or bonus finding is many companies have good controls over large purchase. When I say large purchases, anything over $100,000, they have processes in place, which was kind of a little bit surprising because we thought this is a spend control issues across the board. But most people have that under control. Now what they don't have under control is those small purchases that slip through. Office supplies. You know, if you're like, we're working with a lot of biotech companies, so lab supplies, duplicate lab supplies are being purchased or you have, you know, same equipment bought twice because the one person doesn't know what other has audit and so on. So that was kind of pretty interesting is what we found. So just a quick recap, three things which you should do if you're a growing company, right? Make sure you have a purchasing process so that you can scale, your purchasing process can scale with growth. Number two is centralize your spending so departments are not taking their own decisions and have better visibility so you can make better decisions. If you like this video, go hit the subscribe button so you get notified next time when we release a video like that. Thank you for joining me today and I'll see you in the next video.
