Procurement Orchestration: Offering Order in Complexity

Indirect Source to Pay (S2P) is the process of selecting third parties to provide services to support internal operations. It remains one of the most uniquely complex and cross-functionally dependent business processes to exist. The breadth and depth of cross-functional inputs required and the pace at which these teams change can leave sourcing and procurement or finance teams feeling like they are trying to stop not one but many runaway trains.

Tools like Zip have revolutionized how effectively and easily teams tasked with the effort of bringing control to chaos can do so.

Technology is only one piece of the solution to helping companies balance order, control and predictability with human nature and internal culture-driven behavior where the path of least resistance reigns supreme.

"Orchestration" rightly elicits an image of a conductor writing music, then leading a group of musicians through the piece to the desired effect. The program delivered may consist of several pieces, in this article when I reference a "procurement program" I mean this to encompass:

1. Policy
2. Process
3. Pople
4. Systems

In this article we'll explore four components to successful source to pay orchestration and outline specific actions that any company, at any stage with any team can achieve.

The Conductor

You are practicing source to pay. If your company is buying services and software to operate, someone is choosing vendors and signing contracts. Hopefully you are paying your vendors on time. Source to pay starts with employee number one, and will morph many times as a company grows. How painful this growth is remains highly dependent on when you decide to make it a focus, who you have in place, how much they care and what tools they have at their disposal.

I've built procurement functions for many years and now work on the advisory team at Zip. In these roles, I've seen dozens of business programs built, only to be torn down soon after. Those that fail, fail because there is no conductor. Nobody to orchestrate, and program shortcomings prove too painful for the audience.

You do not need a dedicated procurement team to successfully orchestrate source to pay activity. You DO need two or three individuals who understand the problem well enough to care about it.

Start by:

1. Understanding what intake to pay means and the role of sourcing. Define what is at stake if these activities happen without oversight, hint: it's not good.
2. Assign a conductor(s). For companies without a dedicated procurement team you may call on a few individuals to create a committee (I would recommend one from Finance, one from Legal and one from IT). Hire a procurement manager early.
3. Outline the program. What policies does source to pay encompass? Processes, people and systems all fall within scope.

The Music

Why do we see such massive turnover in systems used to manage business process? A common thread of lack of ownership (see the section above) paired this with policies not designed for the systems in place and poor, unkept processes it's no wonder the orchestra sounds rusty at times.

Few business processes rely as heavily on users to play their role as source to pay.

Procurement orchestration tools like Zip are meant to ensure your employees adhere to policies such as purchasing, signature authority, budget approvals, security and privacy, legal, the list goes on. Don't take offense, but that policy that you created probably won't be read by most of your employees, and even if they do read it internalizing and actioning based on policy alone is unlikely.

Policies exist for boards of directors, not for employees. Process gives life to policy, one is only as good as the other.

1. As a header to the full body of work, Summarize policies into three sentences as an employee facing TLDR.
2. To create user-centric processes, users should be consulted. Design process alongside users with regular "sentiment checks" to maintain.
3. Implement a change management process to update process documentation regularly. Poor documentation is often a root cause of process and policy failure.

The Orchestra

One member may be able to mask mistakes in the crowd, but a whole unit playing out of order and the piece is ruined for an audience that expects a seamless performance. Beyond strategic sourcing and procurement teams, who has a direct stake in source to pay policy and process?

• Finance - CFO, Controller, FP&A, Accounting, AP
• Risk and Compliance - Legal, Security, Privacy, Audit committee
• People Teams
• Business systems teams
• IT

Each group has objectives making up a portion of the overall source to pay process. It's no wonder that coordinating the order of operations between teams can be frustrating and seem impossible.

Before orchestration, an orchestra must exist with each player's role defined. In my building roles, I spend up to my first six months simply listening to these cross-functional teams and learning about what they care about and how they care to do it. This allows me to develop solutions that serve my sourcing and procurement purposes but also satisfy key objectives of cross-functional teams. In this way you can become a trusted partner and the company advances.

With so much at stake and so many teams, how can you keep it all straight?

1. Keep a master sheet of stakeholder teams and objectives to reference when designing or redesigning procurement process and policies.
2. Move at the pace of the herd. You'll cause heartache moving at solo speed without investing time in relationships and buy in across these teams.
3. Learn to say "no" or "not right now" to teams that want to introduce an overly complex puzzle piece.

The Audience

All the above points prove useless without the support and participation of your employees, those asked to engage in the processes you've designed. Your employees must be presented with a path to complying with policy encompassing processes, without even realizing it. In a decentralized procurement environment, employees are expected to perform a significant amount of procurement effort and should have a serious say in how things are done.

Users should have a say in process design, not only consulted once at the point of process inception but often as a company progresses through stages of maturity.

No we see a relatively new world of procurement orchestration technology catering to users and developed for ease of experience. Our personal efforts to remain organized and effective are often dominated by applications on our phones and computers that understand human behavior. Business applications continue to hone in on this and must become even more user-centric to truly shine among many options.

Without a user-centric approach to the program, you won't recognize the value of the program you've built regardless of how smart you think it is.

To keep a user at the center of the source to pay puzzle where they belong, try the following:

1. Nominate a committee of 5-7 individuals from different teams who manage vendors and budget for their team. Meet quarterly to cover source to pay program efforts including policy, process and technology.
2. Dedicate significant time to UAT when implementing new tech, let your users present testing scripts to complete comprised of real world situations.
3. Follow up with new users completing a source to pay process for the first time to collect feedback. Collect 3-5 of these feedback cases per quarter and make improvements as needed.

Summary

When done well, source to pay is a master class in the importance of the order of operations and the impact that the right people, doing the right thing at the right time can have on a business.

User-centric processes can support behind the scenes policies when paired with the right technology. When executed properly, source to pay programs are a staple business unit enabling visibility that leads to predictability of outcomes and actionable insights. These insights can be used to make real changes in the support of efficient growth.