Is complex procurement reducing your performance?

Blog | May 29, 2016

complex-procurementPeriodic retendering of contracts is not just good procurement practice, it’s one of the key ways to ensure your organization is getting good value. The process of engaging a new supplier – or actually switching suppliers – sharpens commercial interaction but complex requirements or scenarios can be a blocker to change. So what can be done?

For many organisations, complex tendering situations are a massive barrier to switching suppliers. The result is that they may be losing out on the cost-savings and other benefits that result from undertaking a procurement exercise.

What are the barriers to switching suppliers?

The biggest challenge is often simply the complexity of gathering, documenting and communicating the requirements. The time and cost required is usually the next thing holding buyers back from the possibility switching suppliers. Concerns over the ease of carrying out a tendering exercise are felt by small to medium sized organisations everywhere.

Why is complex procurement so time-consuming?

A lack of dedicated in-house resource to manage procurements might be a key reason why complex tender requirements go un-reviewed. It’s easy to let contracts roll on in the fear that going out to market will create headaches and lots of work.

The teams who are normally tasked with managing supplier contracts alongside the Procurement team – typically the Finance or Legal departments – are already overwhelmed with priorities. The thought of running a process is sometimes off-putting.

Can you avoid delays and ensure best practice?

When awarding contracts for goods and services, organisations – particularly those in the public sector – are under pressure to demonstrate value for money and ensure fair and open competition. Yet complex requirements can thwart all that. The result is often delays and even a reduction in procurement activity. However, if done properly, the outcome of procurement will be significant payback and/or improvement in service and outcomes. This is where eProcurement comes in.

How does an eProcurement system help tackle complexity?

A quality eProcurement system will ‘hard-code’ greater efficiencies into the tender process and dramatically increase the cost-effectiveness of supplier management.

By choosing the right eProcurement solution, organisations will reduce the administrative burden associated with procurement, shorten the timeframes for switching suppliers and see a sizeable reduction in their overheads. eProcurement should remove the process burden from procurement staff and allow them to focus on the detail and adding value to the process.

An eProcurement solution will help you:

  • streamline supplier engagement,
  • automate comparison and analysis,
  • provide openness and accountability,
  • provide greater insight and data, and
  • increase competition.

For more information about our next-generation eProcurement systems download our guide to complexity and eProcurement.