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Modernizing the B2B Procurement Process

Feb. 28, 2023
Many procurement teams are still throttled by the outmoded tools, communication methods and spreadsheets that they’ve been using for decades.

In the race to digitalize their operations and do more with less, companies are investing in more technology, automation and applications that help them achieve this goal. And while some of these efforts are focused on procurement, many CPOs and their teams continue to struggle under the weight of outmoded tools, communication methods and spreadsheets that are used to share data across disconnected systems.

These approaches are holding procurement departments back at a time when the labor shortages make “throwing more people at the problem” nearly impossible. As procurement teams manage high volumes of purchase requests, for example, it’s taking longer and longer to get those buys approved. And as those approvals work their way through the system, the key stakeholders lack good visibility into the process as it’s happening.

This and other “gaps” were brought to light in procurement platform provider Zip’s survey of more than 1,000 U.S.-based finance and accounting professionals. “Respondents are overwhelmingly eager to move the procurement process away from legacy approval workflows and communication methods,” Zip states in 2023 Trends in B2B Purchasing, “and towards automation to improve B2B purchasing efficiency and unlock new levels of spend visibility and control.”

Phone Calls, Spreadsheets and Email

Despite having to manage a high volume of purchase requests and approvals, many survey respondents say their businesses are still using outmoded tools and communication methods in their procurement processes. Most are using legacy forms of communication to manage initial purchase requests for new software and services, Zip reports, including phone calls and texting (60.2%), Microsoft Excel (56.8%) and email (53.2%).

“Businesses are eager to see improvements to the purchasing process, as they look to save on operating expenses in the next year and prioritize team productivity and compliance,” Zip points out in its report. “Given the opportunity to improve procurement processes, finance and accounting professionals believe their businesses could see increased operational efficiency, improvement to finance team productivity and improvements to overall employee productivity.”

The survey also found that:

  • Nearly one-third of companies (32.1%) say their B2B purchasing process is broken.
  • While a majority of respondents (71.3%) indicated they have a uniform process for employees to initiate a purchase request or renewal, more than one-third (34%) of those respondents reported their employees are largely unaware of the process.
  • Finance and accounting professionals are struggling to ensure all purchases are backed by purchase orders: Just 10.9% of respondents said 81-100% of the spend in their organization is under management or PO-backed.
  • Almost half of organizations (47%) are looking to save more than 20% of operating expenses in the next year.
  • When asked what executive-level initiatives their company would be able to achieve if they could improve the procurement or purchasing process, the top three answers were: increase operational efficiency (42.7%), improve finance team productivity (37.5%) and improve employee productivity (38.7%).

Fixing a Broken Procurement Process

As businesses continue to struggle with outdated and manual procurement processes, Zip says some of the biggest issues they’re grappling with include a lack of adequate visibility into overall business spend; difficulties ensuring purchase orders and invoices match; and no way of knowing whether purchases are backed by purchase orders.

The good news is that making positive changes to the purchasing process contributes to the topline objectives of the business, Zip adds, from boosting operational efficiency to increasing productivity and improving operating margins. More specifically, the survey respondents say that if procurement and purchasing processes were improved, they could achieve key business objectives like increasing operational efficiency (42.7%), enhancing finance team productivity (37.5%) and improving employee productivity (38.7%).

“Purchase requests are stacking up and getting lost in long, convoluted approval workflows. This can make it hard for procurement teams to avoid unnecessary costs and for security and legal teams to keep risk under control,” said Zip CEO Rujul Zaparde in a press release.

“[Our] research found that modernizing procurement processes can have a significant positive impact on the business,” he continued, “from improving operational efficiency and productivity to addressing the heightened concerns of controlling costs and mitigating risk.”

This article originally appeared in Supply Chain Connect, an affiliate publication of Machine Design.

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