Do you invest in savings or employee experience – or both?
Corporate procurement often saves money at the expense of work efficiency and employee satisfaction. But savings and a better employee experience can be combined by using human-centric automation in the procurement process, according to Sofigate’s Markus Heinonen and Juha Kujala.
Construction site procurement is often like playing Tetris. A wide range of things are constantly needed on site, from building materials to office supplies and from large machines to small nuts. You can’t stock everything, so every delivery must arrive on time. Even small delays or incorrect deliveries can bring the work of many contractors to a standstill for a long time.
A construction site is just one example of the problems associated with procurement, as each industry has its own specific challenges. In retail, for example, a late delivery can easily lead to a customer who can’t find the product they need buying it in a neighbouring shop. If, on the other hand, too much perishable food is ordered for a restaurant, the result is that much of it must be thrown away when the products expire. In a global company, procurement is an invisible function for most employees, and questions about needs can be bounced around in emails for a long time before they reach the formal procurement processes.
In procurement, atypical is typical
Procurement is a business-critical function for many companies, so they have gone to great lengths to maximise the efficiency of their procurement processes. Nevertheless, when a company is looking for cost savings, procurement is often the target. No matter how efficient the processes, there is always room to cut costs a little further by switching to cheaper products or centralising procurement with a single supplier. Instead of weekly deliveries, it may be cheaper to deliver goods every two weeks.
Often, however, the result is only apparent savings. Less frequent deliveries increase storage costs and tie up capital. Centralisation and compromising on quality can make a company more vulnerable to problems in the supply chain and increase the number of incorrect deliveries. The resulting savings can therefore lead to an increase in overall costs, as the purchasing department spends time on complaints and new orders.
The problem is that traditional procurement processes are based on the assumption that nothing ever goes wrong. However, according to a study by the platform company ServiceNow, up to half of the time spent by people working in procurement organisations is spent on “atypical” situations such as delays, ambiguities, incorrect deliveries, and billing problems. In the midst of these problems, an automated procurement service is of little help.
The solution may lie in human-centred automation. By building a procurement service that genuinely takes into account the needs of the people involved in the process, it is possible to make atypical situations an actual rarity, reduce the problems caused by delays and errors, increase the productivity of the procurement organisation – and genuinely, not just seemingly, save costs. At the same time, the job satisfaction of employees who depend on procurement will increase, which is also likely to lead to savings through reduced staff turnover.
A human-centred procurement service makes everyday work easier
The basic idea behind human-centric automation is to build a digital service on top of a company’s existing business platforms, based on the needs of its users. In procurement, this means streamlining the procurement process throughout its lifecycle, from the moment a user identifies a need to the moment the ordered product or service is deployed.
For the user, a procurement service based on the principles of human-centred automation is first and foremost a facilitator of everyday work. Enquiries, orders, approvals, and delivery tracking all take place within a single portal. In the event of problems, all parties, from the ordering party to the supplier, have access to all the information they need at once. As a result, resolving an invoicing problem, for example, takes much less time than previously.
On the construction site, streamlined procurement ensures that the pieces of the delivery Tetris snap neatly into place. At the restaurant, it reduces food waste. In a specialist organisation commissioning consultancy work, it enables them to get the extra help they need more quickly and affordably. In the retail sector, it reduces the number of times a customer cannot find what they need. In a global company, for example, it ensures that every new employee can easily order the right tools, regardless of their location.
Above all, the right procurement service allows professionals to focus on their core business. This improves employee satisfaction – and saves the employer money in the process.
Read more:
AI will replace humans – and three other myths busted in 2023
Service design is not about decorating user interfaces – it’s a link between people and technology
Authors
Markus Heinonen leads technology services in Sofigate’s Platforms business. He has strong experience in business-oriented IT development. Markus describes himself as a people-oriented problem solver and eternal optimist.
Juha Kujala is Executive CTO of Sofigate’s Platforms business. His professional passion is to drive organisations towards better services by exploiting the potential of new technologies. Juha has strong experience in the ServiceNow platform and service development management.
Director, do you have your data in order?
What’s so special about Sofigate’s approach to transformation?
