Welcome back to Sudozi’s Strategic Procurement series! In our first Strategic Procurement post, we covered the importance of building a data-first procurement process, and how today’s Procurement tools lack the budget context and financial analytics necessary to accelerate profitability goals.

From working with dozens of finance and procurement professionals, we’ve identified, three key pain-points that ultimately hinder a company’s ability to make strategic decisions in the Procurement process:

1. Finance/Procurement cannot determine if a request falls within budget.
2. Teams lack an orchestration tool to streamline approvals and gain holistic spend visibility.
3. Budget Owners lack context to inform their requests and drive alignment toward profitability goals.

In this installment of the Strategic Procurement series we’re going to dive deeper into the first pain-point: Finance and Procurement cannot determine if a request falls within budget.

"Is this request in budget?!"

Getting relevant budget context is hard, and often takes precious time digging to get the right cut of data. But without relevant budget context, how can Finance make strategic decisions on purchase requests or purchase orders?

The emphasis in today’s Procurement tools is singularly focused on workflow automation, rather than empowering teams with the data and AI insights to help inform the Procurement process. As a result, Finance and Procurement teams are unable to make truly informed spend decisions without spending days or weeks sifting through financial data.

At its simplest, a Finance team cannot easily determine if a request falls within budget when reviewing a purchase request or purchase order. What are some of the common issues?

• Budget is at a GL or category level, but the request is for a single vendor
• The request is cash basis whereas the budget is accrual
• The request is for a vendor that hits multiple budget categories
• Existing spend that already happened isn’t updated in the budget so there’s a misalignment on whether or not there’s remaining budget

To attempt to answer such questions, a Finance team is required to navigate across spreadsheets and/or planning tools (e.g. Adaptive Analytics), filter the data down to the correct dimensions (business unit / department / category / vendor) and manually compare the request to this pivoted data. More times than not, there are additional data tasks that need to be done before the insights can be derived.
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What could possibly go wrong here?!

This manual process is both painful and prone to error. The budget check process is ultimately a time-consuming endeavor that can be challenging to scale as the volume of purchase requests and/or purchase orders increases within a company.

The alternative, however, is to have no process at all; this is the unfortunate reality for a large percentage of companies. Strategic Procurement and Finance leaders are simply too busy to prioritize the manual process of digging through an excel sheet to determine how much budget is left in a given month or quarter.  

This is not how a Strategic Procurement team operates

By the time these teams realize a request is out of budget, the payment has already been made and budget has already been breached.

Strategic Procurement ultimately requires relevant data at the point-of-review, otherwise teams can quickly lose control of their spending process. Put another way, a Strategic Procurement process is able to quickly close the gap between Insight and Action.

Closing the Gap between Insight and Action

A proper strategic procurement process will ensure that reviewers are armed with real-time budget insights to ensure a request falls within budget: closing the gap between insight (“how much budget is left for Marketing software this quarter?!”) and action (“should I approve or reject this request?”). 

With access to real-time actuals, budget data, outstanding requests + approved requests, and committed spend (contractual data), Sudozi empowers Finance with full visibility into spend directly at the point-of-review.

Sudozi is the only truly Strategic Procurement solution automating workflows that is purpose-built to arm teams with insights to make informed business decisions, fully aligned with a company’s profitability goals.

Closing Thoughts

Teams need to arm finance approvers and procurement with instant budget insights, directly on the review workflow, to ensure budget discipline. If this is not accomplished, then there are two possible outcomes:

1. Teams waste hours when reviewing a request and are forced to manually navigate spreadsheets to determine how much budget is left.
2. Teams do not conduct a formal budget check review and budget is ultimately breached, initially unknowingly.

Neither of these outcomes sound very strategic to us!

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Stay tuned for the next installment of the Strategic Procurement series! And please reach out to guy@sudozi.com if you’re interested in learning more about Strategic Procurement at Sudozi.