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January 19, 2017

Procurement Process Shape Shifting

Procurement Process Shape Shifting

In Post One and Post Two we defined the most common procurement technology terms and explored what the various combinations of those terms mean. In this final post we take a look at the changing nature of our profession, and how to describe and comprehend it.

The procurement process diagram is an enduring (if variable) process flow model that represents procurement activity and information starting with sourcing and contract management as upstream process and purchase to pay as downstream. The diagram may even include five, six, seven or more steps along with bulleted supporting details related to spend analysis and supplier management. Regardless of the number, those steps are almost exclusively expressed in presentations as “chevrons”: the convenient graphic shape that simultaneously provides an indication of forward progress and offers enough room to type a few words.

Traditional Linear View of Procurement

Linear View Procurement

The problem with this neat and familiar representation is that the Source to Pay (S2P) process is not actually linear. The reality of procurement is less regular and must support the flow of information in both directions, not just end to end but between any of the steps in the process.

In fact, if we allow the information flows to dictate the shape of the diagram, it won’t be a line at all: Procurement should more accurately be visually represented by a kind of hub and spoke model, one that puts master data at the center of all other activities rather than as an ancillary byproduct or afterthought.

A similar trend is being seen in supply chain management. Given the level of interconnectedness between the many players in the traditional “chain”, terms such as web, ecosystem and network are preferred. Procurious recently wrote the following to support their theory that the term “supply chain” is no longer appropriate: “In a hyper-connected, interdependent world, the concept of the chain no longer does justice to the complexity of a supply manager’s role. Any attempt to map out a modern international supplier network will end up looking more like a cluster diagram, or a series of cogs and gears.”1

Ironically, as much as we’re due for a diagram revamp, procurement’s processes haven’t changed all that much. Rather, it is a new perception of procurement’s role that now puts the information it generates at the heart of an organization’s worldview. No longer are we governed by a transactional step-by-step checklist. Instead, we create, centralize and cleanse data knowing that it will be used by different people for completely disparate reasons. The more information we can bring together, the greater the potential for empowering broad, deep and informed decision making.

When the structure of information is task driven, discrete but complementary data is often stored separately. This makes it difficult (and in some cases nearly impossible) for decision makers to combine related data just because it was created and exists at different points in the procurement process. This is a huge lost opportunity. For instance, information about spending amounts and patterns should be available alongside each supplier’s most up-to-date performance information. Staying with the example of suppliers – risk levels, current certifications and as yet unfulfilled commitments to each supplier are far more illuminating when looked at as one picture within a single context rather than three separate and unconnected sets of facts.

If organization-wide shared data – not a procurement-centric process – is to form the infrastructure for procurement operations, our technology has to be prepared to support it. No one would intentionally fracture visibility within the procurement ecosystem, but it is so easy to do it without intending to.

Data can be hard to move around and can easily fall into silos or become lost – especially if you think about it as the output of procurement’s work rather than the core asset we are charged with fostering. Just as procurement is a shape-shifting discipline, so is the technology designed for it. As we discussed in Post Two, choosing the right technology – especially with a core of shared data – is critical if procurement is to achieve its full potential.

To learn more about what’s happening in procurement, as well as contract management, sourcing, supplier management and the rest of Source to Pay, check out our archive of Blogs along with the many white papers, reports and research on our Resources page. If you’d like to see how we’re helping accelerate procurement organizations across industries, contact us to schedule a demonstration.

1. “No More Supply Chains? Another Procurement Term Bites the Dust,” Procurious HQ, 21 December, 2016,

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