Business requirements should inform every investment in new software and technological infrastructure. You don’t launch a new project, purchase a new piece of software, or develop a new process unless it’s in response to a core business need.
But understanding exactly what that need is can be a challenge in itself. It starts with learning how to align procurement with business requirements.
Taking the time to carefully identify, analyse, and document your core business requirements can lead to a smoother procurement process with an outcome that delivers measurable results.
Aligning Business and Procurement Requirements
The ever-changing business environment is placing greater demands upon businesses and requires today’s procurement professionals to develop the skills to maintain alignment with the business strategy. Currently, the procurement process is not aligned with the business’ data and doesn’t encompass the depth of influence across the business.
The foundation of a successful procurement project is the alignment of all requirements and deadlines on the business side.
You can achieve this by:
- Defining each requirement clearly so that you can assess the time and resources you will need to allocate to the project
- Understanding the difference between need-to-have features and nice-to-have features in the solution you’re looking for
- Making the vendor selection process as smooth as possible.
To accommodate the realignment of skills set requirements, corporations should synched with procurement’s processes so there are no interruptions, data is accessible to everyone and manual labor is reduced.
The terms and conditions agreed within the procurement contract can be used as a marker against KPIs which will enable you to manage supplier relationships and resolve any potential issues that may arise during the procurement process. Maintaining a healthy relationship with your key suppliers can play an important role in future procurement needs. Automating key aspects of business-client relationships can ensure continuity with your preferred products and services. It can also help with being first to market with a new product or service to get ahead of the competition.
Automating procurement processes by utilizing software can help enhance decision-making by increasing the visibility of critical information such as emails and communication, contracts, and reports. Procurement software will also help to reduce administration and data entry, allowing employees to concentrate on value-added tasks elsewhere within the procurement cycle.
Using smart contracts in next-generation procurement governance can automate workflows and enforce policies in real-time.
This way, you can ensure purchases are made via the right buying channel and with the right vendor, and can help safeguard against suspect purchases. This allows you to respond to volatile capacity requirements and address more complex capability requirements more effectively.
A smart contract is fully “self-executing”, which means that it is written (or, perhaps more accurately, coded) using a series of “IF/THEN” statements to describe every relevant state of the contract.
IF [Supplier Network #563335] sends [1,000,000 clicks] that [convert to purchases at a rate of 10% or more] THEN release [[$0.005] for each of those clicks] to User/Account #8997824547
The key to “smart contracts”, is to break the commercial elements down into a series of IF/THEN statements and to agree on data feeds that will verify performance.
This makes it easy to manage supplier risk and could make it possible to manage payments without involving a trusted third party!
If order is canceled but payment was already made; a smart contract might instantaneously pay you after getting an update from a trusted source.
If a supplier doesn’t fulfill its obligations and becomes a risk for an organization, smart contracts might stop or modify certain conditions right out of the gate to ensure regulatory compliance regarding your procurement processes.
Such automation in the execution of business transactions brings obvious advantages besides greater efficiency in transactions through reduced transaction costs, we see improvement across all aspects of commercial relationships.
In addition to streamlining elements of existing contracts, aligning procurement would result in the formation of a fresh contract for each transaction. This can potentially break the link between supplier and purchaser.
The next-generation procurement model provides an opportunity for your organization to capitalize on smart contracts and utilize data and analytics to drive performance with Trakti.