Procurement systems should lower, not increase, organisational risk

Companies are proactively looking for ways to standardise and enforce user adoption of processes to reduce procure-to-pay costs, says Jeetendra Fakir, Britehouse Supply Chain Management business unit manager.

A globalised, steadily digitising marketplace that is still fighting to emerge from recession is not an environment in which your procurement division should be functioning without visibility into demand, suppliers, and compliance levels.

"Inefficient, non-standardised procurement constitutes a fundamental risk to your sustainability because it impairs your ability to operate and erodes profit through spend for which you cannot adequately account," says Jeetendra Fakir, Britehouse Supply Chain Management business unit manager.

"And, in the modern, digital era of business, it is an entirely unnecessary financial and information haemorrhage. With the right systems in place, the bleeding cannot only be stopped, but the organisation can actually turn procurement into a proactive enabler of success."

Globally, organisations are realising that procurement must be an integral part of the drive to instantiate new approaches to savings that were developed during the downturn. As a consequence, there is relentless pressure to provide spend visibility and management. And, as the supply base becomes progressively more global, so supply instability grows. This creates an urgent need for insight into levels of supply risk.

In addition, increasing emphasis on green procurement brings with it a proliferation of global and regional regulation that must be tracked and complied with. With all this complexity, employees need intuitive, automated, and integrated processes to be fully productive.

"Organisations are proactively looking for ways to standardise and enforce user adoption of processes to reduce procure-to-pay costs," Fakir says. "This includes preventing maverick buying by enforcing contract and process compliance and, in the process, maximising spend.

"It also entails enabling suppliers to collaborate via onboarding, communication, engagement, and visibility. At the same time, there is an urgent need to harmonise systems to enable end-to-end processes and ensure lower total cost of ownership."

Research by the Aberdeen and Hackett groups shows world-class procurement teams have 71% of procurement spend under management, have 86% of their purchase orders compliant with contracts, are achieving 8.3% incre​mental revenue from supplier innovations, have 60% of invoices paid early enough to secure discounts, and need only 5.3 days to process an invoice from receipt through to settlement – at an average cost of only $7.78 per invoice.

Many of these top-performing procurement teams use SAP's on-premises solutions. Others use SAP's cloud offering – Ariba. Ariba is a network of 1.8 million trading partners across all industries. It processes in excess of 40 million purchase orders and more than 65 million invoices, all amounting to $750 billion in spend.

"Whether you use the on-premises solution or Ariba, you gain access to procurement best practice and a depth of cross-industry expertise and experience that is not available from any other single platform or system," Fakir says. "There is no aspect of procurement that is not automated or simplified and there is no area of procurement into which you cannot gain visibility.

"For these reasons, at Britehouse, through our new Supply Chain Management division, we've expanded our SAP capabilities. We offer specialised procurement expertise, using SAP's world-class solutions and local talent that understands the procurement challenges faced by South African organisations or multinationals operating here. Our primary focus is to enable businesses to work more efficiently by enabling innovation, and making the digital economy work for our customers.

"Specifically, we focus on using SAP's procurement solutions to help our customers reduce their organisational risk and achieve stability of operations in what is becoming an extremely dynamic business environment.