Beyond procurement’s innovation plateau

The industry is no longer moving at the speed modern business demands, so is a social network for buyers and sellers the answer?

Crop Pit Stop

Procurement has a long and rich history. As far back as 3000 BC, scribes tracked orders, workers and materials on papyrus during the construction of the pyramids. In the 1960s, the first generation of ERPs arrived. Then in the early 2000s, specialised procurement applications ushered in the era of data analytics. But despite how far the industry has come, procurement is slowing down – and right when business is speeding up.

There are two factors at play: too much information and not enough efficiency. An ‘if it ain’t broke, don’t fix it’ philosophy underpins the cumbersome processes around approvals and onboarding that even specialist software solutions have struggled to streamline.

Many organisations still onboard suppliers manually or spend countless hours validating and managing vast quantities of supplier master data. Technically, that gets the job done. But emailing across pages of blank forms and then waiting for a new supplier to return the completed version seems a touch archaic in the age of social media and automation.

Procurement portals promised to automate some of this drudge work. However, suppliers are usually notified via email that they need to complete an online form or are sent a link to one – hardly a groundbreaking step-change.

“First, the supplier onboarding document came as a fax, then it came as an attachment on an email, and then it came as an attachment in a portal,” says Conrad Smith, CEO of Graphite Connect, a B2B network for suppliers and buyers. 

Pit stops have gone from 70 seconds in the 1950s, to two seconds in modern F1. It took a massive, radical transformation in operations to make that work

He believes the standard practice is long overdue for a radical overhaul. Smith notes that the new wave of solutions that aim to improve the user experience for vendor requests and approvals don’t really tackle the core problem that plagues procurement: that obtaining supplier data often takes weeks or even months today.

Regaining credibility amid complexity

The amount of data that buyers require is increasing tenfold, meaning these already unwieldy timescales could lengthen in future.

“For the last 15 years now, indirect teams have had to do due diligence reviews on privacy, security, anti-fraud and corruption,” says Smith. Now, modern slavery risks, carbon emission requirements and other compliance considerations are entering the mix. “This isn’t trivial stuff,” he continues. “It’s not two more fields on a 30-field form; it’s more like 300 more fields on an 800-field form that’s clumped right in the middle of the supplier onboarding process.” 

The delays involved in obtaining this data pose a serious threat to procurement’s reputation within the business. “[Our stakeholders] know intuitively that you can’t take three weeks onboard a supplier,” Smith adds. “It takes away the credibility of procurement professionals, and CPOs need credibility to have a seat at the table.”

Without this influence, other departments are more likely to work around procurement or exclude it from early discussions on new projects. So, how can they get up to speed - and quickly? 

Smith (ever the motoring enthusiast) points to a classic Formula 1 analogy. “Pit stops have gone from 70 seconds for two tire changes in the 1950s, to two seconds for four tires in modern F1,” he says. “It took a massive, radical transformation in operations to make that work, but that change came about gradually over the last 70 years.”

Those teams have every resource – and every person – in position well before the car pulls into the pit. And what does this kind of pre-positioning look like in procurement terms? “The really slow part of the process is data,” says Smith. “So that takes you to a place of saying, ‘when I want to onboard a supplier, the data needs to be ready for me.’”

A trusted network

In other words, suppliers need to make all their data immediately available so potential buyers can quickly review it, make a decision and move forward, which is what Smith is setting as the new standard with Graphite Connect. The vision is a trusted network at the centre of procurement, which allows businesses to connect and share critical data - think LinkedIn for buyers and sellers. 

Strengthening and repositioning supplier relationships ranks as a key strategic priority for CPOs, according to Deloitte’s 2023 Global Chief Procurement Officer Survey. Strong category management, good data transparency, and trust will all play into this newly connected dynamic.  Breaking the cycle of endless onboarding surveys brings procurement teams several steps closer to straightforward supplier relationship management and delivering against the year’s top goals.

With Graphite Connect, once a supplier’s profile is filled out with their data, it can be shared with any potential buyer. “As soon as you do that digital handshake and the supplier provides the information, you should know pretty quickly if it’s a good idea or a bad idea to work with them,” he explains. What businesses then have is a centralised “golden record” of all supplier data that seamlessly integrates with ERP systems, he adds. 

One financial services company spent hours on hundreds of new and existing supplier reviews before leveraging Graphite to automate the scoring of assessments and validate new and updated supplier profiles. The change in approach has saved each information security team member two hours per supplier review, adding up to 440 hours saved per year - or 11 weeks of someone’s time.

Reducing supplier onboarding to ten days

Casey’s General Stores operates over 2,500 convenience stores across the US, providing an essential service for many small communities. With suppliers spread across multiple industries, including food, IT, transportation, construction and fuel, manually validating supplier data was a time-consuming task for the company’s data team. 

Inaccurate or outdated supplier information would also need to be weeded out by hand, or risk feeding into critical business systems. The company has recently undergone a digital transformation journey to implement a standardised supplier onboarding for each supplier category through Graphite.

While the team still touches every form, removing the manual back-and-forth has drastically cut timelines down. Now at Casey’s, 90% of suppliers are approved within two weeks and 78% within one week, putting the average onboarding time at ten days.

Smith remarks that, although the innovation cycles in procurement have gotten longer, there is plenty of progress coming down the line. More collaborative supplier relationships, quicker turnarounds and smoother systems are all picking up traction, giving buyers and sellers a steer on the sector’s future.

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