Five Common Procurement Transformation Mistakes to Avoid

By Jennifer Ulrich, Vice President of Advisory at Corcentric

Procurement teams across industries aspire to achieve an average digitalization target of nearly three-quarters (72%), according to PwC's 2022 Digital Procurement Survey . This may be a difficult pursuit for smaller businesses—about one-third (32%) of which presently are not using a Source-to-Contract or Procure-to-Pay solution.

Regardless of business size, one major roadblock when engaging in transformation is that business units tend to have different objectives in mind. The Office of the CFO wants to move away from manual processes to establish controls, enhance efficiency, and reduce costs. Procurement teams want better management, centralization, and standardization of processes to show value through savings.

These approaches are not wrong, but they may be shortsighted.

Businesses that successfully develop a transformation roadmap embrace a well-rounded, collaborative, strategic approach. However, organizations that struggle with change tend to make these five common mistakes:

1.?????Underestimating the basics. When laying out a transformation plan, do not presume the resources, timing, and budget are already in place. Ensure the right people are available to handle every task and account for every cost. Consider staff availability for quarterly meetings or year-end audits and ensure plans are flexible and allow for timing adjustments.

2.?????Leaving out suppliers. Solicit suppliers’ input on what a successful procurement transformation initiative looks like so they react positively to streamlined processes and improved visibility into the status of purchase orders, invoices, and payments. They will benefit from having to deal with fewer people also, which will free up time from phone calls and emails for more value-added tasks.

3.?????Embracing silos. Transformation is not all technology and requires additional steps for compliance, governmental regulations, spend management, supply chain issues, contract management, and more. Procurement and Finance teams must be in alignment from the beginning to capture all needs.

4.?????Lacking consistency. Assessing the need for change must be met with a thought-out action plan. Do not begin unless prepared to follow through. Preparation is paramount for every step, including ensuring the right people are involved at each interval. Inconsistent implementation in the change process can discourage stakeholder involvement and create distrust among business partners.

5.?????Ruling out external assistance. During the discovery and evaluation phases, businesses may not be objective, which is necessary when planning for the needs and anticipated outcomes of a transformation initiative. When those responsible for the transformation also lead the evaluation, objectivity can be blurred. Consider bringing in a third party to share their expertise, perspective, and recommendations to succeed.

Procurement transformation is a complex process. Knowing these common process pitfalls and how to either avoid them or mitigate damages will make for a smoother transition.