Negotiate successfully with your management!
The first contact with us in 95 percent of cases was initiated by procurement professionals because they see Ensolva as a solution to their problems. Still, a crucial step in the digital transformation of procurement is getting support at a high management level, and that’s where things often get stuck and procurement is left with lengthy negotiations – with its management.
Board members are often unfamiliar with procurement issues and activities, so they do not understand why a specialized digital tool is needed and do not see how the implementation of a procurement and cost management system could affect the company.
If the procurement and cost management system is presented in full glory, it will be hard to say NO to it, even to that board member who doesn’t like change and believes procurement can be done even better with the methods he currently uses. Once you understand the benefits of centralized procurement that provides insight into all costs and creates space for savings and new perspectives, your Management will be grateful that you have initiated and invested effort in new values for the entire company.
Despite the differences, procurement is plagued by similar problems
We have communicated with companies from various sectors from manufacturing through service industries to contracting authorities. Procurement departments are organized differently: sometimes they function as part of accounting and administration, sometimes they report directly to the management, and more and more often they are singled out as separate departments. Regardless, everyone has similar problems: high expectations and small investments. That is why internal communication is important. Talk to them before you come up with a proposal to implement a procurement management system, and when that time comes, show them how digital procurement can solve problems and thus affect the entire company.
Manual management of procurement processes is subject to higher costs, disorganized documentation, slow approval cycles, missed opportunities and uncontrolled costs. No matter how hard you try, sometimes it results in chaos. Supplier relationships suffer due to poor visibility and slow and difficult communication. All this is reflected in the internal relations with colleagues at all levels.
How to present a cost management system to the management
1. Communicate with board members even before proposing a new system!
It is a common opinion that procurement has no room for improvement and that it functions satisfactorily according to old school ways of doing business. Find out how management sees procurement, what it expects from it, and how it fits into the functioning of the entire company. Don’t hesitate to ask about the most important goals and consider how procurement fits into it. Strengthen communication with senior management, introduce them to your activities and daily tasks, tell them your problems and where you see opportunities to advance procurement and how this would reflect on the company.
2. Insist on approval to participate in professional events
Procurement professionals often complain that there is no budget for participation in procurement at professional meetings (as opposed to, for example, marketing). Procurement has risen from the company’s margins in recent years and has become one of the key departments whose results directly affect the company’s success. Consequently, professional gatherings, seminars or conferences are organized where you have the opportunity to exchange experiences, get acquainted with trends and find new suppliers.
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3. Place procurement within your company
Consider whether a procurement management system would only help you or affect everyone. For example, a major change at all levels is the Requirements process. All employees within the company fill out and submit applications via a web form. By default, the system sends requests for approval to superiors who have complete insight into the request, and approval or rejection can be done with one click via e-mail or logging into the system. Procurement arranges application forms and obtains all the information it needs for its activities.
4. Involve management in the procurement process of the procurement management system!
No one likes to be put in front of a finished act. In addition, you are depriving yourself of valuable time when you take on the task of conveying information to management from presentations. Inform Procurement to research digital tools and consider how they fit into the company’s business processes. Be sure to invite them to a presentation of the selected solutions. In this way, they will get the opportunity to ask questions that interest them directly to the provider. In companies where management was involved in procurement solutions, the implementation process was 80% faster compared to companies where it was not involved.
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5. Study how procurement is managed by your competitors!
Experience is best learned. Connect with your colleagues in other companies and see how they have made their procurement more efficient. Present to the management how your competition does it, because that way you will determine your position exactly. This is an opportunity to emphasize that ERP and Excel are not enough to meet the expectations and goals of the company.
6. Emphasize the value of risk reduction automation
December is an ideal month to point out the need for a digital procurement transformation. It is a month when the year is analyzed and requires a lot of information and reports. In addition, December is also the month of planning and making New Year’s resolutions. I’m sure your superiors asked you for reports on the past year. How long did it take you? Automatically generated reports and analyzes shorten work by 5 to 20 hours, depending on the company, and that time can be used to create strategies. Automation also reduces the possibility of errors and misreporting.
Consumption management systems enable the improvement of risk management by detailed analysis of contracts, supplier performance and current market trends based on actual data to identify areas of vulnerability and opportunity.
7. Quick return on investment
Conducting online auctions enables a significant reduction in costs and a quick return on investment.
8. Full transparency of data
The task of the Management Board is to have control over all key processes within the company and it certainly worries them that their procurement and costs are often beyond their control. Procurement systems completely change this and allows a fast and accessible flow of information as well as process control and communication.
9. Support your claims with numbers
No matter who you have to convince: the owner, board members or CEO, numbers are part of your success. Offer them specific information about the new system. Concentrate on savings and return on investment, while looking for support in current shortcomings. For example, show how much time you spend creating reports and analyzing, searching, and analyzing suppliers.
10. Remember, saving is an important argument!
Even the most cautious manager is aware that there is always room to improve the spending process. In addition to cost management, process improvement also results in real visibility of internal procurement performance at all stages. Improving the process also reduces the need for additional staff and frees existing staff from lengthy low-level tasks. This means that your team members will have more time to focus on high-level strategy and functions.
11. Build a company image
Procurement is a mirror of the company. Your customers are happier when they see that their end product has been carefully thought through even before it was created. It is important for them to use quality and proven raw materials and to cooperate with proven suppliers. Modern technologies are also a big bonus for new employees, which is becoming increasingly difficult to find.
Our goal is to help and improve procurement processes to the satisfaction of all involved. We hope this article will help you and make it easier to negotiate with your boss. For more details and tips send us your inquiry!