Process Improvement Initiatives

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    • #292519

      This SIG Member from the buy-side is embarking on two process improvement projects. You are welcome to respond to either or both of these questions. Advisors, consultants, and providers are more than welcome to share experiences, case studies, and thought leadership. 

       

      First, we are planning to expand our Purchase Order self-service process where the business submits a requisition directly in Oracle to issue a PO. There is no requirement for signatures because the master contracts are signed and rates are already defined.  We envision implementing this program for low dollar amount (<$50k) contracts. 

      1.What is the dollar amount limitation you have seen in the industry for such a process?

      2.Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1.Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?

      2.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      3.What are the criteria to assign requests to a buy desk or Co-source organization?

      4.Is there a list of companies you can share who provide these services?

       

    • #295265

      At Zendesk I have a team that is part of our Finance Shared Services team that is responsible for low value, low risk contracts.  This is typically up to $50K with limited risk associated.  This Sourcing team is empowered to negotiate the contract as well as pricing directly with the vendors.  We have playbooks that guide them on the contract negotiations and they can escalate to my Global Strategic Sourcing team or to Legal for assistance.  We continue to develop our Shared Services team as an extension of the Global Strategic Sourcing team to enable Category Managers to spend the majority of their time on high value, high risk strategic vendor contracts and relationships.

    • #295266

      These questions and many that would follow can be addressed in the Coupa BSM Platform. I would be more than happy to walk through the benefits of Coupa and what it can mean to your business at your convenience. 

       

      Thank you,

      Mark

       

       

       

    • #295269

      1.What is the dollar amount limitation you have seen in the industry for such a process?

      •We have seen variation of “clip levels”. The organizations in early stages of transformation start around $25K and have manual intervention/audit processes to make sure process/sourcing compliance is met.

      •Many mature organizations raise their clip level to $150K after around 12-18 months of experience with the self-service model.

      •Note: We have worked with clients where we established different clip levels by category by country in P2P system. This takes into account the risk-reward calculation. E.g., adjust clip levels for countries with compliance or fraud issues.

       

      2.Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      •We have worked with clients where we set up proactive and reactive Requisition Review Processes.

      oCatalogs and automated approvals by clip level by category. This process has audit process and needs to have higher % of success rate in the audit findings that are reviewed every quarter. 

      oPR Review process as per the category and country playbooks. This is through a concierge desk to manage change management before going fully automated. Our experience is organization change can be managed by training people on the process compliance.

      oIf any BUs are found misusing the system (during audit process), their delegation is taken away and managed through stronger scrutiny.

      •Compliance risk mitigation could be kept with BU Finance without procurement involvement but needs to be managed carefully so organization doesn’t regress in “wild west” mentality.  

      •Incentives drive behaviors- Enable P&L owners’ performance tied to compliance to policy. Any misses drive performance penalty. 

       

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

      •Workflow management and maintenance is a dedicated workload for this exercise. Many of our clients use a centralized team to keep this in order (size depending on the volume of maintenance – We have seen a team of 1-5)

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      4.Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?

      •Most of our clients use a buy desk approach for this. 70% – Outsourced and 30% – Inhouse.  Half of inhouse management is driven by a strategic decision to stay tactical and half of inhouse management is driven by global presence by the client who thinks procurement operations is critical for their success (supply chain heavy orgs). 

       

      5.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      •Yes, no restrictions on negotiations on client’s behalf except for Federally Sensitive categories. We recommend establishing limits, beyond which, we obtain client’s legal team review. 

       

      6.What are the criteria to assign requests to a buy desk or Co-source organization?

      •Organization Strategy

      •Team’s capability

      •Team’s capacity

      •Value delivery approach – Separation of strategic and tactical activities

      •Efficiency and effectiveness expectations

      •Change management within organization

       

      7.Is there a list of companies you can share who provide these services?

      •ProcureAbility

      •BPO providers like Accenture, IBM

      Conrad Snover | ProcureAbility

      President

      Mobile: 415.806-6726

       

      [email protected] | http://www.procureability.com

       

    • #295270

      1. What is the dollar amount limitation you have seen in the industry for such a process?

      $50k or $20k depending on the risk aptitude of the organization & industry

      2. Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      Yes, For procurement requests submitted directly, It is usually approved by requesters line managers / cost center owners.

      3. We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

      Most best of breed solutions allow workflows basis UNSPC categories

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1. Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?

      Low dollar / Low risk contracts mostly handled internally; Co-source partners onboarded for very specialized procurement contract e.g. Industrial robots etc. 

      2. If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      Not a best practice; Usually involves legal complications to allow offshore companies to negotiate on behalf

      3. What are the criteria to assign requests to a buy desk or Co-source organization?

      Dollar value, Frequency etc. 

      4. Is there a list of companies you can share who provide these services?

      Highly dependent on category of materials / services required 

      Zycus | Biswa Parida | [email protected] 

       

       

    • #295271

      1. What is the dollar amount limitation you have seen in the industry for such a process?

      $50k or $20k depending on the risk aptitude of the organization & industry

      2. Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      Yes, For procurement requests submitted directly, It is usually approved by requesters line managers / cost center owners.

      3. We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

      Most best of breed solutions allow workflows basis UNSPC categories

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1. Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?

      Low dollar / Low risk contracts mostly handled internally; Co-source partners onboarded for very specialized procurement contract e.g. Industrial robots etc. 

      2. If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      Not a best practice; Usually involves legal complications to allow offshore companies to negotiate on behalf

      3. What are the criteria to assign requests to a buy desk or Co-source organization?

      Dollar value, Frequency etc. 

      4. Is there a list of companies you can share who provide these services?

      Highly dependent on category of materials / services required 

      Zycus | Biswa Parida | [email protected] 

       

       

    • #295272
      Anonymous
      Guest

      1.What is the dollar amount limitation you have seen in the industry for such a process?

      In my experience, no signature PO is rarely used. In most cases, approving manager (usually a direct line manager within the business unit) may have signing authority for purchases and would sign-off on most – if not all – purchases. In most cases, this signing authority is typically below $25k and typically around at $5k or $10k.

       

      2.Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      See commentary above; all purchases should have a manager’s approval / sign-off. Some clients implemented multiple levels of signing authority for purchases – for example, Director level at $3k signing authority, Sr. Director at $5k, VP at $10k, etc.. Additional controls can be put in place to account for quarterly / annual spending/approval limits (eg. once a spending/approval limit is reached, all subsequent orders must be escalated to the next level of signing authority), limits on # of payments to same vendor within a given period of time (eg. 2 or more payments to same vendor within a 30/60 day period is escalated/red-flagged). In more general terms, a clear policy about ‘spend it like it’s your money’ is often established / refreshed including clear repercussions for policy violations.

       

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

      It is atypical to have Procurement Category Leads approving purchase requests. Spending approvals are typically approved/signed-off by business owners (who in most cases own the budget) with Procurement involved to validate the integrity of the process (in practice, actual touch points from Procurement should be limited to red-flags or exceptional situations). PS: the Oracle limitation you point out – that spend is categorized by Tax codes – clearly points to a significant weakness in spend management and category-based spend categorization. This suggests needs for enhancement in Oracle or API to a third-party solution for procurement / sourcing purposes.

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1.Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?

      Yes, yes and yes. However, in my experience, creating a “co-source” or “buy-desk” may not deliver anticipated benefits but they almost always create vendor sprawl which further increases the “tail spend” challenge.

       

      2.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      It depends – I’ve seen both instances across client organizations. However, your Legal will in most cases insist on reviewing and signing-off on MSA / SOWs

       

      3.What are the criteria to assign requests to a buy desk or Co-source organization?

      For my clients with buy-desks, the key criteria is spend amount

       

      4.Is there a list of companies you can share who provide these services?

      Proacure (www.proacure.com)

       

    • #295273
      Anonymous
      Guest

      We don’t have the PO self-service process but we do have a streamlined PO process for master contract related purchases. We use PeopleSoft under Oracle as the Procurement system. The requestors use the Express PO feature to issue master contract related PO’s so these PO’s don’t have to go through the requisition approval process for any amount up to $100K. If the amount is over $100K then the business unit manager needs to approve the PO. These PO’s are auto sourced so Procurement does not have to spend time reviewing them. We use Product Code to identify these master contract related PO’s. 

       

      Besides having the business unit manager approve the PO’s over certain amount, another control we have for these Express PO’s is to have these PO’s link to an annual blanket PO. There is a capped amount on the blanket PO so if the accumulated amount from the Express PO’s is over the capped amount then it will trigger a review and a change order by the business unit and Procurement. 

       

    • #295274
      Anonymous
      Guest

      REQUEST 1

       

      1.What is the dollar amount limitation you have seen in the industry for such a process?

      Entirely dependent on the following factors: Industry, procurement maturity of organization AND the level of complexity & magnitude of user base (number of requisitioners possible). Please see examples below:

      • For an organization in low margin industry that has several tens of thousands of requisitioners but low in procurement maturity, the threshold will need to be very low (i.e., $5K to $10K)
      • For an organization rapidly growing and focused on growth trajectory & user experience (high-tech industry) where the requisitioners are expected more mature in their buying behavior, the threshold can be as high as $50K
      • For an organization in manufacturing industry with several sites that require rapid turnaround time on day-to-day purchases, the threshold will need to be low for those categories (repair, maintenance, facilities, etc.) at $10K or lower. In the same organization, for purchases related to professional services driven by corporate functional leadership and more mature buyers/requisitioners, the threshold for those categories can be increased to $25K

       

      2.Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      This is a simple question that is tough to answer adequately. There definitely needs to be a governance framework for sure. But there is no silver bullet for the question how can we make sure that the system is not misused. 

      • There are process controls that can be implemented in tightening the buying channels accessible based on the merits of the category & users/requisitioners (before the fact) such as setting up rules by a combination of GL#, Cost Center # and Vendor # that force requisitioners to follow acceptable buying channel
      • There will still be a need for “after the fact” compliance tracking and enforcement that requires periodic internal audits to check all payables systems (not limited to P2P system) to ensure that users are not misusing/abusing
      • Regular 3-way match (or in the above case 2-way match) that most P2P systems can help establish will be useless in limiting misuse for spend like this. So a combination of before the fact controls that eliminate chance of rogue spending at source AND well publicized and repeatable after the fact internal audits are the best way to ensure the system is not misused

       

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

      A combination of GL hierarchy and cost center (of the requisitioner or the one the requisitioner is placing buying request for) often should help come up with a relatively quick mapping categories and thereby the right approver. For example, a request from Finance function/cost center to purchase from Oracle (as vendor) may be for Hyperion purchase and hence should be a “software license” whereas IT function/cost center raising a request with Oracle as vendor may be for IT software/services

       

      REQUEST 2

       

      1.Do other companies have a co-source partner? Are they doing internally (in-house team) or externally? –

      Several organizations use external providers such as GEP, WNS Denali, IBM, Accenture, etc. as their buying desk services provider

       

      2.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      Yes. There is no issue with offshore companies negotiating T&Cs as long as the signing entity is still the client, not the offshore external service provider

       

      3.What are the criteria to assign requests to a buy desk or Co-source organization?

      Same criteria as listed above. Creating a “buying guide” that defines rules for routing each purchase requisition based on the criteria listed above (GL#, Cost Center, Location and Spend Category) AND is implementable on existing P2P system is key to be able to route/direct requests to the buying desk effectively

       

      4.Is there a list of companies you can share who provide these services?

      Please see above, in response to question #1 regarding buying desk

       

    • #295275
      Anonymous
      Guest

      1.What is the dollar amount limitation you have seen in the industry for such a process? 

      >$50K and below.

       

      2.Is there a governance around business submitting the requests directly without going through Procurement?  Yes, using a BOT that issues the POs through a client request portal without going through procurement.  How do companies make sure that the system is not being misused? 

      Spend is monitored quarterly.

       

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers? 

      We are tax exempt. 

       

      4.Do other companies have a co-source partner? 

      We do not, other may.  Are they doing internally (in-house team) or externally?  Internal.

       

      5.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf? 

      We do not, but perhaps some companies do; however, I suggest the company has their legal department review the contracts or negotiate with use of their legal departments.

       

      6.What are the criteria to assign requests to a buy desk or Co-source organization? 

      I do not have direct knowledge of this.

       

    • #295276
      Anonymous
      Guest

      1.What is the dollar amount limitation you have seen in the industry for such a process?

      Our Institution has a single requestor threshold of $1,000 for catalog and contract based orders.  Order must include a contract number.  Orders up to $100,000 may skip Procurement provided that a contract number is attached.  Note: These orders require a department or business unit financial approval in addition to the requestor.

       

      2.Is there a governance around business submitting the requests directly without going through Procurement?

      All orders have to be submitted through our Procurement system.   How do companies make sure that the system is not being misused? No purchase orders are allowed outside of the procurement system.  Divisional Financial managers are responsible for reviewing spend and budget adherence. Note: there is an opportunity for low-value fraud under this system.  It is no greater than the fraud opportunity for transactions that go through Procurement when requestors may submit a bogus request. 

       

      3.We have multiple category teams and would like to include them in workflow approval process for PO. 

      However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers? Account Codes/Procurement Categories are the common ways to route procurement transactions.  I’m not sure why an institution would route requisition and purchase approvals by tax codes.  Tax codes would be more appropriate for invoice approval.  Procurement Approval and Invoice approval should not use the same methodology (or approvers).

       

    • #295277
      Anonymous
      Guest

      1. What is the dollar amount limitation you have seen in the industry for such a process? 

      this shouldn’t be restricted to low value; while the requisition includes the proper GOA (Grant of authority) approval could be any value. Controlling at the requisition stage looks like restricting operations. Low value request should be controlled at the invoice level, making mandatory that the supplier at the invoicing includes the approver name and approver code plus attaches the business request (e-mail, letter, etc.). This invoice will navigate through the GOA set for this transactions.   

       

      2. Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused? 

      our case business is allow for direct request for values under $500,000 (While there’s a master agreement in place with an approve price list). As mentioned the control is at the invoice level setting a workflow that included AP and the business.

       

      3. We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers? 

      Invoices direct via system like ADP and requires from the supplier to indicate the Master, the item of the price list, plus the approver details. This item will have categories or type associated.

       

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1. Do other companies have a co-source partner? Are they doing internally (in-house team) or externally? 

      NO

       

      2. If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf? 

      no, they are allow to collect exceptions for our review and approval.

       

      3. What are the criteria to assign requests to a buy desk or Co-source organization? 

      no

       

      4. Is there a list of companies you can share who provide these services?

      no

       

    • #295278
      Anonymous
      Guest

      Regarding the first request:

       

      1st, I feel it is more appropriate to tie approval to requestor’s HR hierarchy for requisition approval based on approval limits established within Oracle HR for each employee. In order to alleviate excessive volume flowing through the approval process it may be well to define who has the role permission to create requisitions and establish a floor amount (i.e.; $5000 per requisition, $15,000 per month or something similar). All other approval limits in the approval hierarchy should also be role based and defined in the employee record. Once a requisition is approved then the buyer or procurement team would review for exceptions to approval limits. Fo example, if a requisition is over the requestor’s approval limit, then it goes to their one over. This continues until a certain level is reached in the hierarchy. Such level needs to be determined as a control (say $50,000 for directors) along with response times at each level. Response time control should create a flow to the next level automatically. IT should insert a control at this point to ensure that the employee data is updated daily to account for retirements, new hires, terminations, resignations, etc. Additional controls will be needed to automatically refer the requisition submitted for out office one over’s, to the next level. The procurement team should have a separate approval limit schedule in order to facilitate business. Once the requisition is approved, the requisition bounces against the contract PO and creates a release PO as long as the contract PO $ value is still valid. Additional processes for those exceptions need to be created within the system. Not sure using tax codes as categorization is the most efficient. However, changing the GL is a major undertaking so would recommend establishing a team to map the spend to the current system while working to review updates for efficiency. It all depends on the system of record for reporting purposes. Whichever GL code matching is used, if the team can define the codes by use category (commodity) it may be better than using tax and will certainly help the procurement team leverage the spend appropriately. Note though, that there may well be crossover on some items of spend due to multiple use applications, especially in tail spend.

       

      If it is a requirement for procurement category leads to approval PO’s, then such a control can be built into the system by IT. Depending on the type of spend, this will need to occur anyway, especially if such procurements are in excess of the materiality threshold used by the company. would suggest however, that if it is for low dollar procurements, automation inclusive of secure Release PO transmission to the vendor may be appropriate.

       

    • #295279
      Anonymous
      Guest

      1Our existing self serve threshold is $150k, but with some Caveats.   We do need to have a master Agreement in place and if this is for professional services, an agreed to SOW needs to be attached to the Purchase Requisition.   In terms of the dollar thresholds, this should be decided by evaluating the benefit to your Procurement team.   Meaning,  if 80% of the PO’s will remain below the threshold, is there a benefit of only removing 20%?  If 5% are 10X higher in value, perhaps making up 80% of the spend, then perhaps set the threshold to remove the 80%..  If adding the threshold does nothing to improve the value of your procurement team to the organization, then why implement?  Be sure to have the Business Case that makes clear the value in removing these tasks from the team. 

      2We do outsource these transactions to a third party.   The quantity of invoices are very large and high speed scanning/invoice processing services are required.   At my prior employer, we utilized Verizon, to process our invoices.   Interesting.  Right???   At [our companyy] we utilize a third party to both process the invoices and create the PO’s after approval of the requisitions within the agreed to $$ thresholds, reducing this burden from the Global Procurement Team, allowing them to focus on Category Management and more strategic initiatives.  The point I’d stress here is that everyone needs to weight the costs of these services to the value proposition they provide.   

       

    • #295280
      Anonymous
      Guest

      1.What is the dollar amount limitation you have seen in the industry for such a process?

      if the master contract is watertight and pre negotiated commercials are included into a contract, the limit can be set at $250K or even higher.

      There is not much procurement can contribute if rates are locked in.

      2.Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused?

      The responsibility lies with the BU to ensure the rates quoted by supplier are as per agreed master contract.

      A procurement operation team or a support team can ensure parameters are aligned as per agreed master contract.

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?

      Ideally you will need to club your spend into 3-4 main categories, Marketing, Corp Services (Real Estate, Facilities, HR, Prof Services) + max 2 more categories.

      The system will need to pick up these main categories and allocate Category Leads as approvers.

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1.Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?

      Procurement can decide categories that can be classed as low dollar, low risk categories of spend.  Items in these categories can be procured either via a Pcard (handled by business) or a PO exempt category of spend.  No sourcing intervention, BU makes a decision and proceeds with the spend. (gifts, visit visa fees, stationery….)

      We have an internal procurement operations team which handles buy-desk. 

      2.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf?

      Ideally, external companies should not be allowed to negotiate on behalf of client.  Visa negotiates the deal, contract signed, external company has visibility of the deal and then can operationalize the deal based on pre negotiated terms.

      3.What are the criteria to assign requests to a buy desk or Co-source organization?

      4.Is there a list of companies you can share who provide these services? 

      I can think of Genpact.  There are a few others who provide similar services. 

       

    • #295281
      Anonymous
      Guest

      1.What is the dollar amount limitation you have seen in the industry for such a process? 

      AT [OUR COMPANY] WE INTRODUCED A <$25K PROCESS.  THIS IS BASED ON FEEDBACK FROM KPMG AND OTHER CONSULTING FIRMS AS AN INDUSTRY STANDARD.  SEVERAL FIRMS CURRENTLY EXPERIMENT WITH HIGHER THRESHOLDS LIKE <50K BUT MANY FEEL A BIT INSECURE ABOUT THAT LEVEL.

      2.Is there a governance around business submitting the requests directly without going through Procurement?  How do companies make sure that the system is not being misused? 

      WE INTRODUCED VERY STRONG COMPLIANCE PROCESSES AROUND IT.  THE BUSINESS OWNER ANSWERS SEVERAL QUESTIONS BEFORE HE/SHE IS LET THROUGH TO THE SELF-SERVICE FUNCTION UP TO $25K REQUISITION VALUE. CONTRACTS AND RATES ARE PRE-NEGOTIATED.  INITIALLY WE HAD COMPLIANCE ISSUES BUT WITH TRAINING AND CLEAR CONSEQUENCES WE ARE NOW IN THE CLEAR. KPMG INFORMED US THAT OTHERS STRUGGLED EXACTLY LIKE WE DID IN THE BEGINNING. 

      3.We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers?  

      WE ARE WORKING IN COUPA AND ALL OF THAT INFORMATION IS SYSTEMICALLY SUPPORTED.  MY PROCUREMENT COE DOES CONTINUOUS SPOT CHECKS IN THE CONTEXT OF COMPLIANCE BUT OTHERWISE NOBODY IS INVOLVED.  WE LIMIT THE PURCHASE CATEGORIES WHERE THE $25K PROCESS CAN BE APPLIED AND PURCHASES WITH PRIVACY AND CYBER SECURITY RISKS ARE EXCLUDED.

       

      Second, we would like to implement a co-source/buy-desk.  Desire is to either partner with an external organization or create an internal team to handle low dollar/ low risk contracts for quick execution. 

      1.Do other companies have a co-source partner? Are they doing internally (in-house team) or externally?  

      I THINK MANY COMPANIES EXPERIMENT THAT. WE DID INHOUSE CO-SOURCE WITH SHARED SERVICES UNIT AND OUTSOURCE WITH ACCENTURE.  BOTH WERE A DISTRACTION AND LED TO A DETERIORATION OF PROCESS AND INTERNAL CLIENT SATISFACTION.

      2.If externally, are offshore companies allowed to negotiate Ts & Cs on their behalf? 

      NEVER THOUGHT ABOUT THAT AS WE ONLY WORKED WITH NORTH AMERICA BASED FIRMS.  OUR SHARED SERVICES CENTER LEVERAGES OUR INDIA BASED SHARED SERVICES CENTER WITH QUITE SIZEABLE LEGAL STAFF.  

      3.What are the criteria to assign requests to a buy desk or Co-source organization?  

      SEE ABOVE – ONLY LET THEM DO SIMPLE PURCHASES

      4.Is there a list of companies you can share who provide these services? 

      ALL LARGE ACCOUNTING FIRMS DO SOME OF THESE SERVICES (DELOITTE, ACCENTURE,  ETC.) AND SOME SPECIALISTS LIKE LOGISOURCE, ET AL.

       

       

    • #295282
      Anonymous
      Guest

      1. What is the dollar amount limitation you have seen in the industry for such a process? 

      Contracts can have values up to any limit. The approval process can be set to increase the level of the approver as the dollar amount increases.

       

      2. Is there a governance around business submitting the requests directly without going through Procurement? 

       

      I do not recommend going around Procurement. Spend visibility is key to a successful procurement team.  How do companies make sure that the system is not being misused? Adherence can be monitored by expense and capital budgets.   

       

      3. We have multiple category teams and would like to include them in workflow approval process for PO.  However, our Oracle categorization is defined per Tax codes and there are hundreds of them.  So we have to map those tax codes to our procurement categories, which demands a lot of maintenance in future.  How do other organizations categorize these requisitions to enable Procurement Category leads as approvers? 

      Oracle has the functionality to set multiple approver flows by team with all having the CFO as the final approver based on the value of spend.  

       

    • #295283
      Anonymous
      Guest

      I am implementing a co-sourced model right now, started about 6 weeks ago but it has been a bit choppy as a result of knowledge and process gaps on my team.  I am having to find myself stepping in to re-direct a lot more than expected but I believe it will get smoothed out in the next couple of weeks.  I have done this model previously well and would like to get it up and running here to redirect based on contract Ts’ & C’s subject matter expertise while my internal team adapts to learn and scale.  I am starting with the contract side first and once the process hand-off between the team is working well, looking to add more tasks and team members off-shore.  The original org design was intended to be all on-shore internal but I found that it was not scalable so looked for alternatives to quickly get to a better state.  Once stabilized, we will continue to add in that model.

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