Procurement teams continue to evolve, especially as the executive leadership team looks to them for value and competitive advantage in addition to cost savings. Although the procurement value proposition is broadening, compliance is still an important factor in their success. This is true – not because procurement is on a power trip – but because they cannot deliver maximum value or drive down risk without it.
While procurement has several good reasons for wanting to drive compliance, few distributed buyers care enough about the upsides to tolerate a poor user experience. This means that procurement must find a painless approach to ensuring compliance at point of purchase.
Legacy methods for managing compliance involve measurement, oversight, and enforcement, techniques that win few friends for procurement. Taking a more relationship-based approach to achieving compliance will require procurement to remove friction and even ‘grease the skids’ where necessary to lead rather than push buyers through approved channels.
Without technology, this will quickly become a labor-intensive effort that procurement does not have the resources to carry out consistently and at scale. Procurement solutions must therefore apply policy controls naturally and strategically, so procurement can manage spending activity and supplier contracts without damaging the buyer experience.
Traditionally, procurement has had to choose between their own need for control and insight and the amount of freedom afforded to buyers. With today’s digital expense management solutions, they no longer need to make a choice.
As Lisa Smith, former CPO at Ford Motors, explained, procurement has a mandate to empower buyers as much as to manage spend.
As she points out, sometimes the solution is more strategically pairing categories, suppliers, or even contracts with the buying channel that allows buyers to have their needs met quickly and easily. Even when non-compliance continues, procurement must be careful not to take a punitive approach. Rogue spend is a symptom of a larger problem, not a problem in and of itself.
“Rogue spend is feedback to the procurement team that something is wrong,” said William Hovis, former CPO of Coca Cola. “They need to figure out what isn’t working, so they can either change the policy or re-train employees.”
Procurement’s first task in ensuring compliance is to investigate and understand the ‘why’ behind non-compliance. Only then can they compare the current process to alternatives and select the solution that best addresses the company’s need.
Three key factors will make a difference between offering a good or poor user experience – and therefore high and low levels of compliance:
How buyers perceive procurement will impact their compliance; if procurement processes and technology are unreasonable to use – for any reason – buyers will feel less and less obliged to adopt them. As a result, procurement has to ensure that policies, processes, and enabling technologies are integrated, facilitating rather than demanding compliance and doing so in a way that meets everyone’s needs.
For more information, read Four Insights Every CPO Should Know About Travel & Expense by SAP Concur.
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