July 20

Downsides to Managing Your Procurement Process Manually

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Manual processes are time consuming by their very nature. That, it goes without saying, is the underlying rationale behind automation in general. Every year, companies continue to spend thousands of hours on manual processes and new software companies emerge to automate those processes.

Documents everyone -- doing this manually is rough.

Marc Andreessen famously said, “Software is eating world,” and it seems like scarcely a day goes by without some major publication featuring an article contemplating the long-term consequences of Artificial Intelligence. Yes, despite the macro trend toward the streamlining and ultimately automating time-consuming processes, sourcing has remained largely untouched.

Indeed, the most common way that RFPs are managed is via ever-growing email threads with Excel and Word documents attached to them. A few years ago, Forbes released an article titled Microsoft's Excel Might Be The Most Dangerous Software On The Planet. Although Excel is an extremely powerful tool with broad adoption, it is not necessarily an effective solution for your organization’s sourcing needs.

With so many sourcing projects yielding poor ROI, procurement departments and stakeholders alike could certainly benefit from tools that automate many of the cumbersome steps and simplify the collection and analysis of the data that drives the ultimate purchasing decision. Running manual sourcing processes increases the likelihood that organizations purchase products or services that do not properly align with their business goals. In some scenarios, poor lines of communication or lack of access to pertinent data can even result in multiple purchases of the same product or service by a single organization. 

Even when an organization is successfully able to avoid redundant purchases, there can be significant costs to running a process “the old-fashioned way.” Check out some of the downsides to managing your vendor procurement process manually.

Selection fit—The odds that you make a poor decision increase when using a manual process as it’s harder to compile all of the information in a centralized location, make apples-to-apples comparisons, and drive stakeholder engagement due to limited visibility of the process.

Process cost—Absent a compelling software solution, it becomes more time consuming to source products and services. Copying and pasting from multiple files into a single spreadsheet can take hours. And when this happens, organizations are reminded of the old adage: “Time is money.” This is particularly true when there are larger, more complex sourcing projects.

Poor ROI—Mix a less-than-optimal selection with a process that takes more time than it should and you have a recipe for an underwhelming return on investment. It is critical for organizations to do an ROI analysis to truly understand the costs of their sourcing efforts.

If you are managing your procurement process manually, you run the risk of making some of the most common errors including:

  • Making judgments based on incomplete information
  • Introducing copy-and-paste errors when building consolidated documents
  • Creating errors due to rushing because stakeholders find the process time consuming and cumbersome, precluding them from focusing on their primary responsibilities
  • Gathering incomplete or poorly-defined requirements
  • Underestimating the amount of work involved, which results in delays

Does any of this sound familiar? Organizations that embrace business process automation have cut costs and saved time. By eliminating much of the manual overhead involved in your sourcing process, you reduce the error rate and time investment, while boosting your ROI. This approach has worked in other domains. For example, B2B marketers who implement marketing automation increase their sales pipeline contribution by 10%. (Forrester Research) Similarly, embracing a good sourcing solution that automates critical parts of the process makes it easy to apply best practices and therefore improve outcomes and ROI. Sign up for Vendorful to see how an RFP management solution can improve your vendor procurement process.