Every organization knows it needs to move into the modern age of procurement. They understand the urgency of updating their procurement tech stack, especially in the light of rising inflation and dwindling cash reserves. However, the question that leaves many organizations frozen in their tracks is simple – where to start?
With a multitude of technologies available both upstream and downstream, and even cross-stream, it can be difficult to decide where to commence. It’s crucial to remember that all tech implementations should be approached with a phased strategy; after all, Rome wasn't built in a day. An all-at-once implementation is not only impractical but potentially disastrous, given that these applications require comprehensive data to function optimally, need substantial user training, and demand demonstrable value from the get-go to justify the ongoing license fees.
Having established that, it becomes important to start somewhere. With a suite solution, it's tempting to jump straight into the deep end, but remember to start small and build up. But where?
Upstream, organizations have the options of Strategic Sourcing, Spend Analysis, Supplier Management, and Contract Management. Downstream, there’s Catalog Management/e-Procurement, Invoice and Order Management, and e-Payment. Additionally, cross-stream options include Risk Management, GHG/Carbon Tracking, and Inventory Management.
If we take a step back, it’s clear that before deciding where to start, organizations need to understand their needs and constraints clearly. In our view, an organization should begin by tackling the most critical areas that need improvement or those that can deliver the most value, taking into consideration data requirements, user training, immediate value, and user acceptance.
Interestingly, it might not be wise to start where you might think. For instance, while Inventory Management is vital, its optimization might not save much in a Total Cost of Ownership (TCO) calculation. Similarly, GHG/Carbon Tracking is important for those with reporting needs or sustainability goals, but it might not help in controlling procurement costs or risks. Risk Management is increasingly critical in today's uncertain environment, but it might be secondary if you can't even locate the goods to order.
In the upstream realm, Contract Lifecycle Management and Supplier Management could seem like primary points of entry. However, not all purchases require contracts, and suppliers can be discovered through various means outside of a dedicated solution. Spend Analysis can rapidly pinpoint cost reduction opportunities, but realizing these requires a further step.
Turning downstream, e-Payment is obviously a later-stage process. Order/Invoice Management could seem more immediate, but again, this comes after the order placement. This brings us to e-Procurement.
Considering all these factors, e-Procurement could potentially be the best starting point for many organizations. It's where the order for the good or service you need is placed. Getting this right can set a solid foundation for implementing the rest of your source-to-pay suite, whether upstream, downstream or cross-stream.
Remember, the journey of a thousand miles begins with a single step. Don't be overwhelmed by the options. Just start somewhere, learn from the experience, adapt, and keep moving forward.
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