How do you halve the size of your operational purchasing team? Easy!
It is easy to halve the size of your operational purchasing team – in theory at least. If you double the number of catalogue managers you have, you can cut the size of your operational purchasing team by 50%
OK, it’s not scientific, it’s a rule of thumb. Like other rules of thumb, it is useful and is often quite accurate but when stretched, it can stop making sense. And of course, it’s not actually easy to cut a team by 50%. In practice, it is quite a challenge in terms of change management. But the rule of thumb does stand up to some scrutiny and indeed, it describes the fundamental principal on which e-procurement is built. To understand why, we have to go way back to the 20th century.
The basic principal of e-procurement was this: free up the time of the operational purchasing people by giving internet enabled catalogues to requesters for frequently bought/non-strategic goods. This allows the expert buyers to concentrate on the exceptions. The problem was that it never quite worked out like that. Catalogues tended to be limited to the easiest catalogable goods such as stationery and IT consumables. Everything else was too hard. Either the suppliers weren’t eproc savvy or the things that requesters wanted to buy (such as services) were seen as impossible to put into a catalogue. There was also a problem with compliance. Even if goods were available from an existing catalogue, fussy requesters insisted on going off piste. E-procurement became a tool to enforce PO compliance and automate approvals. That’s not a bad thing but the benefit of empowering requesters with catalogues to free up the buyer was relegated in importance.
Today, in 2017, although problems of compliance persist and catalogue usage is limited, there is much less reason for this to be the case. Users buy in to technology much more readily today and modern solutions make it easy to comply – they’re also much better at handling more complex categories like services. But there remains many more operational purchasing people supporting the purchasing process than one would expect if the the P2P process was fully automated. This is because, organisations resist investment in people to support automation.
It may seem counter intuitive. Automation means that the technology performs the work that people used to – the only people you need are the people that do the tasks that can’t be automated. But that’s not entirely true. In the P2P world, the more catalogues you have the more you can automate. But catalogues need manual management. Checks need to be performed and errors corrected. Suppliers need to be managed to ensure catalogue data is up to date. These tasks require human intervention but that investment in human resources pays for itself and more by reducing further the work that professional buyers need to do to support non-catalogue requisitions.
I’ve spent more than a couple of decades in the P2P space and I have never – and I mean never – seen an organisation invest in catalogue management to the extend that they should. I’ve seen large global organisations have up to 10 times more operational purchasing people than catalogue managers when it should be something like 5 times as many. Bearing in mind that a professional buyer could cost over 50% more than a catalogue manager, changing the balance of skills is a no brainer.
Pete Loughlin can be found on twitter @peteloughlin