16 Apr 2012 Why is everything always a mess?
Ask anyone who’s worked in more than one purchasing organization. When it comes to technology, they’re not normally what you would describe as model implementations. Supplier data all over the place, catalogues out of date, Heinz 57 varieties of purchasing system. Purchase to Pay processes are very rarely joined up and if purchase to pay really is the plumbing of your organization, you’d be drowning.
But before you beat yourself up about your role in this chaos, ask yourself the question: Why is it that everything is always a mess?
Take an example. An organization with a mixture of purchasing categories of directs and indirects. Most of the indirects are catered for using an e-procurement system interfaced to the ERP finance module. There are exceptions though. A few business units use different finance systems (a result of historic mergers/acquisitions) and they use a range of solutions from in-house developed to native ERP solutions.
Directs is another matter. The supply chain processes are more complex and there are idiosynchratic interdependencies on the warehouse management system as well as the fulfillment processes and technology of some off the strategic suppliers.
A wide range of P2P processes are in place from self-billing and vendor managed inventory to telephone orders using a purchasing card.
Compliance to contract as well as process is general poor with an unhealthy level of maverick spend and the No PO No Pay policy is impossible to enforce. Some business units simply ignore procurement and P2P policies because of their “special requirements”.
Sound familiar? Unfortunately, the purchasing organization is dysfunctional. Broken.
Or is it?
The conventional wisdom is that “the mess” is a bad thing but generally, the right things get bought and suppliers get paid on time (or at least eventually). Of course things aren’t as efficient as they might be but it not the purchasing organization that’s broken – it’s the technology or rather how we approach the technology.
Multiple incompatible purchasing systems, multiple finance systems inherited as a result of acquisitions and mergers– they are not just usual they should be expected. Mergers happen and any architecture design that doesn’t allow for a diverse set of platforms is naïve.
Maverick business units with low levels of compliance due to “special requirements” – Tell an engineer or an architect which suppliers they need to use from your preferred supplier list and he’ll give you a two-word answer. (Clue: the second word is “off”.) And quite right too. Diverse and highly specific requirements need to be embraced.
Poor data and out of date catalogues – this isn’t always dues to a lack of investment in data maintenance it is also symptomatic of expecting to be able to take a snap shot of a changing world and wanting it to stay still for long enough for you to be able to extract value from the data.
So to the original question: Why is everything always a mess. Actually it’s only a mess relative to the simplistic, theoretic scenarios we want it to fit.
We can’t expect business to adapt to the technology we need to adapt the technology to the business. Businesses operate in the real world and the fact is, the real world is pretty messy.