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It’s no secret that procurement is often viewed as a bureaucratic, complex process that requires a lot of people and systems to run efficiently and effectively. In reality, procurement can be streamlined and simplified while still driving value for organizations and supporting their overall success.
In its new report, To Crack Procurement Complexity, Make Processes Simple by Design, Gartner, Inc. offers up some valuable tips on how to think beyond cost management and leverage supplier capabilities when streamlining the procurement function. “Rapid global changes are making procurement processes increasingly complex, but the standard streamlining tactic of cutting out steps can worsen the problem for employees and teams,” Gartner’s Ryan Tandler writes.
Of course, simplification is often easier said than done, and CPOs have historically had to make tradeoffs between cost, quality and speed. That said, Tandler sees some real potential for improvement in the procurement function, where simplicity can be a powerful ally. Here are four ways procurement departments can harness the power of simplicity:
Avoid the “efficiency trap.” As Tandler says, “overzealously cutting steps from a process, or creating one with too few of them, increases complexity.” Like instructions for assembling furniture, each stage of a procurement process provides guidance for the person carrying out the task—and the more thorough the roadmap is, the better. This is particularly critical in highly-complex situations, where team members need more steps to guide them.
Get your staff involved. Give users a seat at the decision-makers’ table in process improvement initiatives and you’ll wind up with a truly integrated team that can “co-create” change. “Staff must have real input in the design, not just opportunities for feedback,” Tandler writes. “If users can’t execute a procurement process consistently and effectively, the value to other stakeholders will be inconsistent and inadequate.”
Focus on “designed simplicity.” Designed simplicity is about making things easier for people to use and to understand. And while mastering conventional process redesign increases transformation success by 5%, Tandler says you can bump that number up to 42% by using designed simplicity. “Procurement functions that take the conventional route are 26% more likely to encounter complexity in their transformations,” he writes. “Those that follow designed simplicity principles, on the other hand, are 21% less likely to do so. In other words, when CPOs follow the conventional method, their transformations make complexity worse, whereas designed simplicity reduces it.”
Check out the business use cases. If you’re not convinced that designed simplicity helps improve procurement efficiency, consider this business use case highlighted in Gartner’s report. It says Trinity Health’s procurement leaders recognized the importance of users’ perspectives in process improvement and began requiring all procurement employees to submit at least one process improvement idea each year.
“The organization trains staff using tools like the Kaizen process improvement system, and managers coach team members throughout the ideation process,” Tandler writes. This ensures that only the best ideas ever reach decision-makers. Since making the shift, Trinity has generated over $1 million in annual cost savings in it procure-to-pay process alone.
Thinking Beyond the Conventional Route
Looking ahead, expect designed simplicity—that simplification of systems and processes without sacrificing efficiency or functionality—to play an increasingly larger role in procurement departments across all industries. The heavy burden that’s being placed on leaders and staff to get involved with initiatives that “transform” functions will likely be a major driving force behind these efforts.
“Procurement functions that take the conventional route are 26% more likely to encounter complexity in their transformations. Those that follow designed simplicity principles, on the other hand, are 21% less likely to do so,” Tandler writes. “In other words, when CPOs follow the conventional method, their transformations make complexity worse, whereas designed simplicity reduces it.”
