Procurement is widely acknowledged as an intricate undertaking for most businesses. It involves employees carefully choosing the right products or services and identifying suitable vendors, while also ensuring that all necessary documentation is meticulously prepared and forwarded to the relevant internal and external departments. Without the appropriate systems in place, this entire process can easily become inefficient, consuming valuable time and resources.
This is where guided buying steps in. Guided buying encompasses an array of tools and technologies, ranging from data analytics to artificial intelligence, which businesses deploy to empower their employees to make well-informed purchasing decisions within a specific yet crucial domain. It constitutes a pivotal element of the broader digital transformation, promising substantial improvement in ROI.
Discover how you can seamlessly integrate guided buying practices into your workflow, employing state-of-the-art tools and automation to efficiently accomplish the task at hand.
Defining Guided Buying
In most organisations, there exists a dedicated procurement function, either in the form of a specialised team or a distinct department. Their primary responsibility is to secure the appropriate quantities of supplies, materials and professional services at the optimal cost, ensuring seamless operational continuity.
These procurement teams are already tasked with managing company-wide contracts and high-volume transactions. It would be impractical to burden them with overseeing every “minor” transaction made by employees, such as procuring office supplies or covering incidental expenses like meals and travel.
In such scenarios, it is far more efficient to empower employees to make these purchases directly. This allows them to operate independently while still adhering to the organisation’s budgetary constraints and overarching objectives. Guided buying, in essence, serves as a supportive framework that assists employees in navigating the procurement process for their specific needs. This streamlined approach to employee spending proves immensely beneficial for individuals and smaller teams alike.
What is the Mechanism Behind Guided Buying?
Within a standard guided buying framework, employees possess the autonomy to initiate pre-approved purchases through a dedicated portal, free from the necessity of procurement team involvement. This methodology not only expedites transactional processes but also mitigates the potential for unregulated or careless spending.
A company has the capability to tailor this portal, assigning distinct personas to individual staff members based on factors such as:
- Position
- Role within the organisation
- Anticipated categories of purchases
By doing so, the portal gains the capacity to accurately discern the specific requisites of each employee and set appropriate spending limits. Subsequently, it fine-tunes its suggestions in alignment with these parameters.
Who Benefits from This?
For staff members, this self-service purchasing platform provides a reassuring experience. They can trust that every available option comes from verified suppliers with carefully curated pricing. There’s no need for uncertainty when every choice presented is a viable one.
From a business perspective, guided buying guarantees that every transaction, regardless of size, harmonises with the overarching objectives and complies with the company’s procurement policies.
Furthermore, for procurement departments, this translates into heightened control over procurement policies. They are equipped with superior tools to oversee not only the purchasing process, but also strategic sourcing, contracting, and handling other requests.
How Guided Buying Resolved Traditional Procurement Challenges
In comparison to conventional procurement methods, guided buying offers a host of compelling advantages that cannot be overlooked.
- Enhanced Efficiency: Guided buying streamlines research and reduces bureaucratic bottlenecks. It provides clear direction to employees in vendor and supplier selection, along with setting up processes that require minimal intervention from procurement or finance teams. This is crucial in expediting the overall process, particularly considering the often lengthy approval timelines.
- Elevated Staff Morale: Empowering employees with greater control over their purchasing decisions fosters a sense of autonomy and boosts morale in the workplace.
- Leveraging Data: As organisations expand their supplier catalogues, they accumulate a wealth of vendor information, pricing details, and payment terms. Guided buying enables any employee to tap into this invaluable repository of insights.
- Informed Purchasing Choices: Users of the guided buying portal can cross-verify their decisions against internal company policies, receiving alerts if a potential purchase may not comply.
- Expedited Decision-Making: Employees are provided with a concise catalogue, eliminating the need for extensive market research when making purchases.
- Seamless Integration with Business Tools: Guided buying solutions seamlessly integrate with accounting software and other enterprise applications, creating a cohesive software environment.
Guided buying is designed to encompass most routine requisitions and purchases made by employees in their roles. However, one-time, or specialised purchases may not align with the guided buying portal and will need to follow a traditional process involving purchase orders, requisitions, and approval workflows.
The Influence of AI on Guided Buying
While artificial intelligence (AI) continues to undergo experimentation across various industries, its transformative impact on procurement processes and the guided buying experience is already in motion.
Machine learning algorithms have revolutionised how companies approach buying decisions strategically. By analysing historical transactions, they suggest novel goods and services based on current requirements. This means that employees seeking to fulfil a specific need might discover a previously unconsidered offering in the market.
- Detecting Non-Compliance
In a time plagued by fraudulent and rogue spending, management is consistently seeking ways to achieve predictive compliance — the ability to detect anomalous purchasing activities at an early stage. Here, artificial intelligence collaborates with guided buying platforms to flag any unusual financial behaviour and promptly notify management. For instance, if a purchase appears to deviate from a company’s internal policy, the guided buying portal will alert the user beforehand.
- Securing Superior Deals with Preferred Suppliers
E-procurement solutions, in general, leverage artificial intelligence to gather market research data and insights on favoured suppliers. This enables them to secure superior deals, negotiate lower prices, and seek out higher-quality products and services. Even when employees are the decision-makers, an AI-powered guided buying portal can promptly suggest the optimal options.
- Data Collection and Analysis
At its core, AI is driven by data. Its predictive abilities and recommendations are rooted in the data gleaned from past business activities. The integration of machine learning into workflows empowers businesses to extract actionable insights from this wealth of information that might otherwise go untapped.
Setting Up Guided Buying: Best Practices to Follow
Guided buying, a crucial facet of the procurement process, demands a strategic approach. To harness the full potential of this portal on SAP Ariba, adhere to the following recommended steps:
- Furnish Comprehensive Procurement Data: It’s imperative to start by ensuring that your guided buying portal is equipped with accurate procurement data. This includes information about your preferred suppliers, along with verified products and services. This foundation is essential for providing a seamless experience to your staff. Be it direct acquisitions like raw materials or indirect ones such as professional services or travel expenses, maintain a catalogue of approved purchasing channels and suppliers.
- Enforce Procurement Policies: Define and incorporate your procurement policies into the portal. Buyers must adhere to these guidelines when making purchasing decisions. Tailor the rules based on the user’s rank or role. For instance, higher-ranking employees may have access to a more generous budget allocation. Additionally, empowers users to provide justifications for transactions if required. Include provisions for requesting exceptions, subject to management approval.
- Gather Data and Insights Opportunity: for a solution that has the capability to autonomously collect and analyse its own data. Understanding the spending patterns of your employees can yield valuable insights for future procurement endeavours. This information might unveil opportunities to negotiate more favourable terms with suppliers or even lead to the discovery of potential new partnerships.
Address Your Key Procurement Challenges with Guided Buying
Guided buying empowers ordinary employees with the expertise typically reserved for top procurement managers. This means even routine transactions within business operations align seamlessly with company policies and budgetary constraints.
Modern guided buying solutions leverage artificial intelligence, machine learning, and online resources to optimise businesses’ utilisation of market insights and established supplier networks. By boosting user adoption of the platform, we believe that you’ll discover that the intelligent guidance features grant employees swift access to the products and services essential for their daily responsibilities. Talk to the team at CJV Partners to know more!
