To grow and ensure optimal performance, businesses must constantly improve their processes. This involves making them more agile, robust, faster, and more reliable. The challenge is to eliminate processes that add little value for customers or represent a source of waste, to improve the quality of results. While there are various approaches to process improvement within a company, here's a possible approach that any procurement department can implement.
Step 1: Conducting a diagnosis
This first step involves assessing the current situation. It requires examining, analysing, and evaluating the existing processes. The goal is to identify weaknesses, dysfunctions, bottlenecks, repetitions... In other words, any issues that could affect the productivity, quality, or overall efficiency of the procurement department. This analysis should include all aspects of the supply chain: From supplier selection to contract management and order placement. All this while ensuring that processes are well-aligned with the company's strategies.
This work is carried out through direct observations, interviews with employees to benefit from their field experience, and studies of existing documentation. It's important to understand the needs, pain points, and expectations of stakeholders. This is also the conviction of José Gramdi, researcher and author: "We cannot consider leading a team, a company, or a workshop into a movement of improvement or transformation without the directly concerned players being stakeholders. Putting people at the heart of the system is one of the major foundations of the continuous improvement process. Managers, directors, and shareholders must trust the intelligence of their teams and their ability to solve problems." This provides a comprehensive visual of the business's or department's operations.
From there, we know the different stages of the processes, the stakeholders, and the opportunities for improvement... This leads to choosing which processes to optimise, then setting objectives: Reducing transaction costs, improving supplier performance, optimising supplier contract management... Each objective should be SMART: Specific, Measurable, Achievable, Realistic, and Time-bound. This ultimately allows the project team to determine its key performance indicators. Among the best procurement KPIs are, for example, the ROI (return on investment) of the procurement function, the average transaction execution time, the rate of purchases made outside of contracts...
Step 2: Rethinking your processes
Once the company has completed its diagnosis, it needs to (re)build its processes. The idea is to make them even more efficient and adapted to its objectives. Some steps may need to be eliminated, others merged, new ones added, the order of tasks changed, procedures standardised...
To do this, the entire team can rely on various proven and structured process improvement methodologies: Six Sigma, Just-in-Time Management, Kaizen, Lean... Ivalua, an international leader in the expenditure management solutions market, explains the multiple virtues of the Lean philosophy: "Lean in procurement and supply management can be seen as a way to improve the procurement process and workflows, reducing time and eliminating waste; to reduce costs while improving the quality of products and services; to improve supplier performance and responsiveness; to focus more on activities that add value to the company; and to strengthen the strategic rather than transactional orientation of procurement."
Automation is also a key element in business process improvements. Don't hesitate to exploit technology to automate repetitive and/or manual tasks. In fact, a study by consulting firm McKinsey showed that 50 to 70% of tasks are potentially automatable within the procurement function. Today, most procurement departments have started the automation of their Procure-to-Pay (P2P) process via e-procurement digital solutions. This business process management software can take over many tasks: Order placement, matching between order and invoice... In the future, procurement teams can go even further in process improvement efforts with Robotic Process Automation or Intelligent Process Automation...
This work must then be presented to the main stakeholders, i.e. the procurement department, but also internal customers. This is an opportunity to present a new mapping that highlights how processes would function with the applied small changes. Creative and participatory process improvement techniques can be implemented to involve them in the approach, gather their feedback, and challenge the envisaged modifications. After this, it's essential to validate the new processes. This involves both simulations in real conditions and exchanges with teams to ensure the employee engagement for change.
Step 3: Implementing the change
The third step consists of implementing the new validated processes. This involves thoughtful and measured deployment, in a change management logic. Process improvement is thus inevitably accompanied by an information session, or even training, for the various stakeholders. When these changes involve using a new digital solution, this may include a tutorial, for example.
Once the changes are implemented, it's essential to monitor and measure performance. Through the implementation of dashboards, teams will be able to monitor business processes in real time, identify any problems or inefficiencies, and thus react quickly. The project team can combine this data with feedback collection from stakeholders. This is how all necessary adjustments for processes continuous improvement can be made.
Lastly, business process improvement is a true transformation approach within the company. For this project to be a success, it's necessary to rely on adapted tools, constant communication, and a solid culture of continuous process improvement. By working collaboratively to rationalise processes, the organisation reduces errors and inconsistencies. In the long term, this means optimising operational efficiency, reducing costs, and improving customer satisfaction.
