When discussing corporate activities, we often perceive processes as distinct and separate entities, each seemingly unrelated to the others. But is that truly the case?
Take tendering, auctions, and contracting—the fundamental components of procurement. There are individual systems for tendering, platforms for auctions, and software for contract management, each functioning well on its own. However, in the business world, these elements are interconnected and rely on one another.
How can you create a contract without having tender information? How can you ensure cost-effectiveness without linking it to the auction results?
A continuous flow of information between these components is essential for the smooth operation of corporate processes. When we view these processes as isolated points, we risk overlooking the significance of this unimpeded flow. This can lead to hidden costs for the company and additional work for the procurement team, which may go unnoticed.
Procurement departments frequently utilize separate software for different workflows—one tool for contract management, another for requests for quotations (RFQs), and yet another for supplier evaluations. Additionally, the hundreds of email exchanges that occur from the initial identification of a need to the placement of an order can complicate matters further. These isolated systems do not communicate with one another, resulting in data being trapped in silos and leaving procurement processes fragmented.
After introducing various point solutions, teams often find that work hasn't become significantly faster. While a particular task may have become more efficient, the overall process remains sluggish. The core issue lies in manual and uncoordinated workflows, which can lead to wasted time, loss of information, and data entry errors.
Manual and administrative workflows create extra work for procurement teams, often with little added value. Procurement professionals can spend a significant portion of their day—up to one-third—searching for the necessary information across various systems, emails, and documents. Tasks such as copying data, manually updating statuses, and tracking approvals consume valuable time that could be better spent on strategic initiatives. This not only reduces efficiency but can also contribute to employee burnout in the long term.
When processes are performed manually, information loss is almost unavoidable. When data is scattered across emails, various Excel spreadsheets, and personal folders, it's difficult to see the complete picture. As a result, corporate knowledge becomes tied to individuals rather than the organization as a whole, creating a significant risk. Important details, such as past issues with a supplier, specific clauses in contracts, or crucial agreements, can easily be lost in the clutter of systems and documents. This lack of information can lead to poorly informed strategic decisions.
Manual data entry and management often lead to errors. For instance, when a colleague inputs the same information multiple times into different systems or spreadsheets, the likelihood of typos, different formats, or outdated data increases significantly. A misentered price, a missed approval step, or an overlooked deadline can result in serious consequences, such as financial losses or strained supplier relationships. Additionally, manual processes create inconsistencies; instead of having automated, uniform workflows, different colleagues may handle the same situation or information in varied ways. This not only hampers efficiency but also poses compliance challenges for the company.
Procurement is not merely a collection of separate activities - it is a process comprised of various hierarchically interconnected sub-processes and micro-processes.
Let’s consider an example of how process-oriented thinking applies to procurement:
The procurement process consists of several interconnected sub-processes. It typically begins with supplier sourcing and their qualification. This is followed by tender preparation and execution, during which qualified suppliers receive invitations to participate. After bid submission and evaluation, an auction may take place to secure the optimal price. This is followed by the announcement of results, contracting, and subsequently, supplier relationship management.
These sub-processes can be further divided into micro-processes. For instance, supplier qualification includes ESG assessment and risk management, while results evaluation involves total cost of ownership (TCO) calculations.
These micro-processes are constructed from small modular components, such as AI agents, API calls, or form completions, that connect seamlessly to one another like LEGO blocks.
Faster decision-making and reduced costs: Process-oriented thinking reduces the need for hidden manual tasks and the time spent searching for information. When procurement data is centralized and presented uniformly, management decisions become quicker and more informed. Additionally, costs associated with manual workflows can decrease by as much as 30-40%.
Higher achievable ROI: Process-oriented thinking helps organizations maximize their investments by avoiding isolated systems. By eliminating duplicate data entry and data silos, departments such as procurement, finance, and legal can access the same information in real-time. This significantly enhances the return on investment from their assets.
Our ROI calculator enables you to quickly determine the potential return on investment from procurement automation for your company.
Reduced operational risks: Fragmented workflows pose compliance and contractual risks. Process-oriented operations establish clear areas of responsibility, provide a comprehensive audit trail, and minimize financial or legal repercussions stemming from human error.
Competitive advantage: Flexible and modular processes enable quick adaptation to market demands without compromises. You can design processes tailored to your company, providing a competitive advantage over rigid, template-based solutions.
Supporting growth with lower costs: Thanks to its scalability, the system can be expanded at a low cost as the company grows. Additionally, processes that work for procurement can also be applied to sales and finance. This means that having ten times more users does not necessarily lead to ten times the cost.
Extended value chain efficiency: Process-oriented thinking facilitates the integration of suppliers and partners, leading to joint optimization and collaborative value chains. This approach not only enhances internal efficiency but also extends beyond the company's boundaries, making the entire supply chain more competitive.
Choosing the right process automation software is essential. Look for an AI-based, scalable platform that promotes process-oriented thinking. It should be highly customizable, offer complex access control, and have robust security features. Additionally, ensure the platform supports data autonomy and operates within an ecosystem that includes your partners.
When selecting software, follow our checklist on the following link.
How Fluenta One supports this approach
Fluenta One is a process-oriented procurement platform designed to move away from traditional point solutions. Instead of offering separate modules, the platform focuses on end-to-end processes in which every function connects seamlessly. This approach ensures real transparency, automation, and scalability throughout all levels of procurement operations.
The system's key capabilities:
Explore how Fluenta's process-oriented platform reduces hidden costs and enhances procurement efficiency through a focus on process-oriented thinking.
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