GUEST TALK
TOP 5 LESS KNOWN MYTHS IN PROCUREMENT Procurement processes of businesses are often found mired in myths and misconceptions. However, visible improvements can be brought about following clear rules and right communication.
PRASANNA RAJENDRAN Vice President, Kissflow PROFILE Prasanna heads the business operations of Kissflow Procurement Cloud, a flexible procurement software for procurement teams to streamline all their purchasing processes in a single place. Armed with more than 20 years of experience in technology, he has helped Fortune 500 companies with custom solutions in the sourcing and procurement space. A dynamic and ebullient tech leader, he has distinct expertise in equipping procurement teams to gain visibility, control and efficiency.
Procurement is often overlooked, although it is one of the most crucial functions of any business. Procurement’s role is to source products, services, and other items and to ensure that the procured items are of high quality, best price, and available at the right time to the organization. Businesses are now focusing on how they can improve their procurement processes to reap more benefits. Unfortunately, companies sometimes fall prey to misconceptions and myths embedded in their strategy, which limits your procurement efforts. LESS KNOWN MYTHS IN PROCUREMENT Here are the Top 5 less known myths in procurement that can negatively affect your procurement process: 1. The Cheaper the Supplier, the Better Most organizations seek the cheapest vendor when procuring material for any project, department, or organization. In fact, cost reduction remains the second most common KPI used for supply chain monitoring. Not only do organizations like doing business with cost-effective vendors, but they also prefer them over even the slightest costly vendor. The problem arises when the supplier lowers the quality of the product to stay cost-competitive and please the customer. This leads to decreased product life of the material used by the organization itself or sold by it. In both cases, it costs organizations heavily as they must procure new products or mend ruined market reputation, which is worse. Although price is a significant consideration when selecting a vendor, it is only one aspect of the process that procurement experts use to locate the best suppliers for the task. The procurement team needs to understand that a critical element of procurement’s job is screening suppliers, negotiating the best price, and maintaining a healthy relationship with them. 2. Procurement Processes Are Difficult to Follow and Take Time Sometimes processes are considered mundane, and
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everyone feels like skipping them to get to the result as soon as possible. Every employee wants to have the required material at their disposal, get stuff done and move on to the next task. But procurement of any product or service needs a process to be followed. Processes are important to implement and adhere to as they can help identify maverick spending and justify organizational spend in case of conflict. Doubtless, manually writing details on the purchase requisition form, sending it for necessary approvals, converting it to a purchase order, and at last placing an order requires both time and effort. But considering the importance of a predetermined process and policies, each and every step must be adopted. To resolve this issue, procurement teams can introduce procurement software that helps get quick approvals, auto-flip purchase requisition to purchase order, and does a three-way matching to ensure the right products are delivered. Procurement technology streamlines the entire procurement process while providing visibility of every single step along the way. It also helps employees to track their procurement request that informs them regarding the status of their required delivery. Apart from that, instead of going through multiple contracts and manually cataloged items from preferred vendors, they can simply view and add to the cart digitally cataloged items. Such features make every process mandatory and easy to follow. 3. Supplier Relationship Is All About Cost Savings Every procurement department knows that a healthy relationship with the supplier is crucial to a business. But, most organizations expect that their relationship with the supplier will lead to cost savings in the form of discounts and rebates. That’s a false perception. The aim of building relationships with suppliers holds more strategic importance than just cost savings. When a company focuses on supplier relationships, suppliers ensure to get you the best quality products. Likewise, occasionally if an organization needs urgent delivery, these suppliers go out of their