De-Risking Procurement Transformation with Arkestro
Digital transformation stands as one of the top two priorities for procurement teams in 2024, promising increased efficiency and reduced spend even as companies continue to sweat budgets and cost control. This trend demonstrates how important procurement transformation can be for companies strapped for cash, time, and resources.
Internationally renowned brands like Starbucks and Unilever have harnessed procurement transformation to save millions of dollars annually and improve supplier performance by 15% or more. By leveraging artificial intelligence, data analytics, and automation, global brands have achieved increased visibility into supplier bases and improved supplier satisfaction by as much as 20%.
Still, procurement transformation comes with certain risks. If not adequately managed, these risks can lead to cost overruns, delays, and even failure of transformation initiatives.
To avoid this fate, procurement teams must take precautions that decrease the risks of procurement transformation and ensure the organization reaps the desired benefits without encountering substantial setbacks.
Understanding the Risks in Procurement Transformation
Before diving into de-risking strategies, it’s essential to understand the common risks associated with procurement transformation. Here are some of the top challenges businesses face:
- Resistance to Change: Employees and suppliers are sometimes hesitant to adopt new processes and technologies, which limits and slows return on investment.
- Scope Creep: As business needs and stakeholder requirements evolve, procurement transformation projects often expand beyond their original scope. This deviation can lead to budget overruns and delays that counteract the benefits of the initiative.
- Data Integrity Concerns: Inaccurate, incomplete, or unreliable data can compromise the effectiveness of transformation and negatively impact decision-making.
- Technology Integration Challenges: Integrating new procurement technologies with existing systems can be complex and prone to errors, leading to operational disruptions.
- Supplier Disruption: New procurement processes can affect supplier relationships and changes to their business operations, causing disruptions in the supply chain.
De-Risking Procurement Transformation in 3 Steps
All types of business transformation are challenging, and procurement transformation is no exception. Just 12% of companies reach their original goals with business transformation, often because they lack focus and fail to prepare for the future.
Fortunately, these proven strategies can help you beat the odds and establish a solid foundation for success.
Prioritize Change Management
If procurement teams don’t adopt new procurement technology, your business won’t realize the full benefits of digital transformation. That’s why getting buy-in across the company from the very beginning is critical. Make sure to engage with users from their point of view — understand their pain points, know what drives them, and appeal to those pain points as you initiate transformation efforts.
Adopt a “pull method” rather than a “push method,” presenting the tool in a way that pulls your team in rather than pushing new technology on them. Foster change through word of mouth. As employees see their colleagues succeed with the technology, they’ll be excited to embrace it, too.
In the CFO Key Issues and Priorities report from Hackett, 76% of finance executives rated simplifying, standardizing, and automating their processes as the number one priority for their business. Finding a solution, such as Arkestro where our PSG team ensures your priorities and business needs are met, can give you the confidence you need to ensure change management success.
Accelerate Implementation Timelines
Many transformation projects take far too long to adopt, losing momentum before they’re even off the ground. Ensure a swift implementation timeline by choosing an intuitive, modern procurement platform with strong training and customer support tools. Pre-built solutions and templates will help you realize the benefits of transformation quickly, while comprehensive training programs will equip your team with the skills and knowledge needed to embrace change.
Work closely with key suppliers to align them with your transformation goals and ensure they’re prepared to adapt to new processes and technologies. Highlight the benefits of transformation for the entire supply chain and streamline documentation and compliance requirements to integrate suppliers into the new system.
Embrace TEMPO Methodology
TEMPO is Arkestro’s proven strategy for keeping companies on track with procurement transformation, based on a proven, seven-year track record managing customer events and hundreds of thousands of line items across all spend types.
With TEMPO, Arkestro is by your side throughout every step of the transformation process, from transition to ongoing governance:
- Transition: Communicate business priorities, meet your support team, and complete a preliminary risk assessment and mitigation plan
- Exploration: Review current sourcing processes, develop a process map for integration, review KPIs, designate responsibilities, develop a list of PPO events
- Momentum: Get in-depth user training from supplier and buyer perspectives, develop project temples, review strategy
- Performance: Create a pipeline of events based on priorities, then launch, track, and manage events, capture feedback
- Ongoing Governance: Develop and maintain project plan, meet with support team weekly, develop business case
Arkestro delivers everything needed to set the pace for success, including a clearly defined plan, templated assets, and project management tools with step-by-step instructions.
This methodology gives your team time to utilize new procurement tools with real RFPs before deploying them across your entire organization. Savings achieved during this “field trial” period often exceed the cost of full-scale implementation, drastically reducing inherent risk.
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The Benefits of a Successful Procurement Transformation
What do you need to make your procurement transformation successful? It starts with a clear vision, a committed executive team, and the right technology. With these pillars in place, you’ll quickly reap the rewards of your efforts: rapid cost savings, company-wide buy-in, and personalized, ongoing customer support.
Let’s take a closer look at the benefits of successful procurement transformation:
Rapid Cost Savings
A tool like Arkestro rapidly increases your timeline to cost savings. In fact, many customers see significant savings before implementation is even complete. One Arkestro customer was able to run an event in 4 weeks vs. previously 10 months. In addition to productivity gains, contract rates saw a double digit decline.
Company-Wide Buy-In
Arkestro understands the difficulties of change management. That’s why we rely on TEMPO methodology — to overcome these challenges and foster buy-in across the organization. When employees have an in-depth knowledge of the tool and see how it solves their day-to-day pain points, change happens swiftly and organically.
Personalized, Ongoing Customer Support
Ensure your investment pays for itself by choosing a solution with the highest level of customer service. Arkestro facilitates a smooth transition by taking time to understand your priorities and providing in-depth user training. Even after you’ve gained momentum, we’ll always be there to help with ongoing governance.
Source: Dr. Elouise Epstein
Modernizing Your Procurement Technology
A modern procurement tech stack is an advanced system integrating various technologies to streamline procurement processes. It automates tasks, reducing manual errors and saving time, leading to significant cost savings. With advanced analytics, it supports data-driven decision-making, optimizing purchasing strategies. Seamless integration with other business systems enhances workflow and collaboration, while real-time data tools improve supplier relationships and ensure a reliable supply chain. Overall, it boosts efficiency, productivity, and strategic innovation in procurement.
Achieve Procurement Transformation Success Today
Successful procurement transformation offers an immense competitive advantage and allows companies to do more with less. On the flip side, failed transformation projects waste time, money, and resources, leaving less time for strategic procurement tasks.
A lot is riding on your investment. Ensure it’s a success by choosing the right technology partner — one with a proven track record, comprehensive rollout plan, and ongoing customer support.
Contact Arkestro to see how you can realize all the benefits of procurement transformation, like running three times as many events or achieving 16% cost savings within the first 60 days. We’ll help you optimize results, see immediate impact, and make better buying decisions at scale. Get in touch now.