When it comes to procurement policy, you’ve crossed every “t” and dotted every “i.” You’ve sourced all your goods and services, negotiated your contracts, and made sure preferred pricing is in place. Everything is set.
So why is money still slipping through your fingers?
The unfortunate truth is that some employees of midsize businesses value perceived convenience or personal preference more than organizational policies. When they find an easy end run around the system, they take it. And you lose control and, very often, money.
How much can you lose? Let’s put it this way:
Every $1 you save on procurement is equal to approximately $10 in revenue.
Let’s find some ways to save by examining where things go wrong.
1. Disconnected systems leave users in the dark
Yes, your procurement teams have their vendors lined up. They have their signed contracts and their carved-in-stone pricing. But if this information isn’t carried through to your accounts payable system or the purchasing tools your employees use, they literally won’t know who they’re supposed to buy from or what they’re supposed to pay. As a result, you run the risk of buying from non-preferred suppliers and, more importantly, overpaying for goods and putting unnecessary strain on your budgets.
You need a system without gaps, where data, processes, and documents flow from one step to the next – to your suppliers and back – drastically reducing out-of-policy spend.
2. It’s too hard to tackle every expense category
In many midsize companies, there are a few expense categories that run well and are easy to use. But in the shadows, the remaining spending is too diverse, too distributed, and therefore, too difficult for any single system to handle. As a result, spending on those categories gets hidden on expense reports, and you won’t see all those dollars until months later when they deliver an unexpected hit to the bottom line.
You need a system to centralize and simplify it all so that your policies are applied to virtually every category of spending – from purchase to payment. You need a solution that is designed to manage all types of expenses and efficiently automate approval workflows, no matter how complex your supply chain.
3. A bad experience pushes good users away
If your system or software slows people down – or even if usability isn’t as intuitive as it should be – no one is going to use them, no matter how much training, communicating, or begging you do. Users will find ways around clunky systems. They’ll buy directly from suppliers or use other channels that don’t have the procurement safeguards you’ve put in place, thereby exposing your budget and your business to unnecessary risks.
You need an engaging solution that guides people through the purchasing process – a one-stop, simple-to-use destination that keeps users coming back, keeping them compliant and safeguarding you from fraud, rogue spending, unreliable suppliers, and other risks.
4. There are no incentives for suppliers to collaborate
If your suppliers don’t have a reason to be an active part of the process, you may not get the most out of those partnerships. You may miss out on innovation, pricing, or delivery opportunities. And without a way to collaborate with your partners, they can’t help you control compliance.
You need a business network that benefits suppliers, so they bring more spending into the system and allow you to keep more spending under policy. SAP Ariba helps bring your partners into the fold.
SAP Ariba is one solution that can solve all four compliance concerns. Learn more about SAP Ariba solutions designed for midsize businesses.