Sometimes procurement seems too complicated. When this happens, employees may ignore the formal buying procedure because they don’t know how to process intake requests or where to start. Perhaps they want to avoid long cycle times or opaque approval systems and buy independently, pushing procurement staff to track receipts and oversee rogue spend. With PO, finance and procurement executives can retain transparency and control throughout the procurement process by integrating and collaborating across all tools and systems.
This guide teaches:
- Definition
- Key components and best practices of procurement orchestration layers are being considered by enterprises today.
- Implementing procurement orchestration challenges
- How a Procurement Orchestration Platform may improve intake and approval procedures across ERP and P2P systems like SAP Ariba
Definition of procurement orchestration
Procurement orchestration integrates all processes into an organization’s procurement strategy for a holistic picture. This includes merging procedures from multiple systems or divisions.
This strong, wide perspective includes tools and tactics that maximise expenditure visibility and procurement team efficiency. Businesses increasingly use PO layers to combine their tools and systems and streamline purchasing operations.
Consider procurement orchestration a collaborative layer for your purchasing IT stack.
You may be utilising an ERP, P2P, or other best-of-breed Contract Lifecycle Management (CLM) or Supplier Information Management systems. As firms use an Intake-to-Procure system, employees may use a procurement “start button” to initiate any request, such as a purchase, contract, or vendor onboarding.
PO covers Intake-to-Pay. Tools, people, and processes are ‘orchestrated’ when united, functioning in rhythm and harmony.
PO overcomes fragmented and laborious procedures created by antiquated legacy systems by enabling fully integrated, real-time stakeholder cooperation across tools and processes.
Quantitative procurement: A case for orchestration
Procurement orchestration is sought to add a collaborative layer to procurement processes and enhance stakeholder acceptance throughout the enterprise.
How do procurement orchestration layers do this? Consider the data, which show frustratingly sluggish, stop-and-start internal operations.
According to Zip research:
- Close to half of 1,000 organisations need six cross-functional approvals for new software or vendor acquisitions.
- 27% needed more than 10 approvals.
- 32% of finance and accounting professionals stated new purchase requests took three weeks or more to approve.
How do you balance these demands and expedite intake and approvals? Nowadays, PO differs from conventional procedures.
Procurement orchestration fixes
If you’ve implemented one or more popular procurement solutions, your procurement team may have had one of these issues:
- Multiple systems and fragmented processes
- No central procurement database
- Fragmented procurement operations cause erratic spending
Many staff dislike new procurement policies and methods. Teams can resist change, even when existing approaches are clunky or problematic—from top leadership on down!
Fortunately, PO has so many benefits that it’s no longer ignored.
Key procurement orchestration components
How can procurement orchestration improve intake and approval when done right?
Automation workflows and procedures
From purchase start, every physical touchpoint slows intake and approval. In the study, 27% stated they need 10 or more approvals. Clearly, a fragmented, manual process may sap efficiency fast.
Automated workflows and procedures save time and interact with ERP and Procure-to-Pay systems. Technology inertia isn’t simply in procurement.
By seamlessly integrating with current systems, PO may solve this. A procurement orchestration layer embeds on current systems to unify experience and reporting.
Process analytics, reporting
More data and metrics help you find bottlenecks and simplify input. Rogue spend may be controlled by procurement teams with more visibility.
With AI insights that may identify duplicate suppliers and other savings and efficiency possibilities, a predictive procurement orchestration platform can quickly demonstrate value and effect.
One intake front door
Using a ‘single front door’ for staff requests, PO manages input. This convenient access point simplifies procurement self-service.
Imagine if employees didn’t have to waste time seeking support via email or Slack—just make your request at the single front door for intake, and every action is straightforward and visible.
Advantages of procurement orchestration
Working with PO providers improves intake efficiency.
Among these benefits:
- Cycle-time and procurement NPS improvements. Delays in approval are no longer weeks with a PO layer.
- Streamlining the process overcomes employee technical inertia. Decreased disruptions boost staff buy-in, improving PO.
- Numbers and procedures can guide real-time decision-making with automated processes and more data. Instead of a patchwork of decisions from 10 or more parties, procurement intake might flow from one data source. Saving time and reducing rogue spending saves your firm money.
Implementing procurement orchestration presents what challenges?
Adding a procurement orchestration layer to intake-to-procure operations might be difficult.
Legacy P2Ps and ERPs might complicate procurement orchestration. Some tools have special fields that are harder to integrate. Others may not work with rival procurement orchestration layers.
Some procurement teams may resist change, and stakeholders may regard PO layers as just more software to complicate things.
Having a single source of truth for procurement improves visibility, control, data integrity, and user experience.
Best practices for procurement coordination
How can procurement professionals maximise orchestration? Like any instrument, you must master its use.
Best PO practices:
- Establishing a business-focused procurement policy
- Centralising procurement data and establishing clear routines and standards.
- Monitoring and measuring performance live
- Encourage internal stakeholders and critical approvers (legal, security) to collaborate
Future sourcing and procurement orchestration trends
Always changing procurement. These trends may affect the space in the future:
- A recent poll found that 42% of CPOs will prioritise ‘supplier relationships’. Supplier selection, supply chain management, and other sourcing needs can be automated, but personal interactions are still important.
- By 2025, procurement will be 75% digital, so utilise a tool workers appreciate.
- Remote employment will continue to help and hurt procurement teams. With hybrid and remote work trends continuing, firms will adopt cloud-based procurement solutions.
- Businesses compete for efficiency amid economic challenges. According to the report, 62.6% of finance directors prioritise efficiency and team productivity this year. Nearly half want to cut operational costs by 20% or more in 2023.
