Managers, don't be naive when implementing electronic tools in purchasing at the employee level

Managers, don't be naive when implementing electronic tools in purchasing at the employee level

This article is not about the world as it should be, but about the world as it is. Based on our practical experience with the implementation of Promitea software in companies, we recommend that managers take a strong and consistent approach. On the contrary, a "soft" approach based on voluntariness, convincing about benefits and relying on the snowball principle does not wor

You have a technology enthusiast on your team

You have half a chance if your department has a technology enthusiast, i.e. a buyer who enjoys trying out new technologies, is not afraid to proceed by trial and error, is happy to share their experience with others, and acts as an engine and source of optimism in key phases of implementing a new tool, when additional effort is required from the team related to the use of a tool they have not yet experienced, and at the same time the promised benefits are not yet apparent.

A skilled manager can harness the potential of a technology enthusiast 100%: appoint them as a "key user" that others can turn to, ask them to communicate with the provider, create opportunities for on-the-job training. And, of course, don't forget to reward the technology enthusiast appropriately for his or her extra efforts.

At the same time, however, the experienced manager knows that the technology enthusiast is more of a sprinter than a marathoner and that specific measures need to be put in place in terms of (a) purchasing processes, (b) purchasing team skill development, (c) management support, (d) performance appraisal and reward systems, and (e) purchasing manager involvement for long-term success of the e-tool. In other words, the success of an e-tool must always be worked for by the manager.

Software acquisition decision

Paradoxically, the most successful companies in implementing purchasing software are those where the need arises from the top, i.e. at the level of directors and owners of the company. We explain this by the fact that the owners subsequently exert enough pressure to get the company to start actively using the solution and see to it that the software delivers all the expected benefits.

Conversely, e-procurement that is "pushed" by the purchasing director and does not secure management support has only a mediocre chance of success because the new process faces resistance from buyers and other users at the outset and a lack of director time. The result is then software agony with pressure to remove the software, or software survival, where the tool is used but only if there is no avoidance and no meaningful development.

The Purchasing Director comments, "Before we bought the software, I went to the Board of Directors and patiently explained what it would bring, then I got the Chief Economic Officer as a guarantor of the successful implementation of the software, then I secured the money for the implementation phase, and I kept saying that we would not move without the support of the management. ... This work paid off when internal customers grumbled that they didn't want to evaluate the suppliers, that they were communicating with them by email and not through the platform, that the contracts were too sensitive to upload to the document management system. The economic deputy picked up the phone and the problem was over. ... I was very careful to report the benefits of the software because management's interest only lasts as long as you're bringing in money. When the well runs dry, they turn their attention elsewhere."

Don't expect buyers to use the tool by themselves

In our observations and discussions with e-tool users, we came to a surprising and quite unpleasant conclusion: no matter how useful, beneficial and intuitive an electronic tool is, shoppers do not start using it on their own.

And we meet the same reasons over and over again: it's faster to do it by email and phone; suppliers can't do it, so it's still rare now; it's not connected, I'd have to; I promise that from next time ...

The purchasing manager comments, "When you don't want something, you focus on a detail and claim it's so critical that the tool can't be used at all. For example, people have told us that the sourcing tool is holding them back because it is not linked to the ERP and they have to export the requirement and then enter the result back into the ERP. When I pointed out the fact that they would do this for an email enquiry anyway, they came up with something else. And these wiggles and excuses continued until I realized that they were just excuses so they didn't have to change anything."

The Group Purchasing Manager responsible for, among other things, the computerisation of purchasing adds: "Managers have the naive idea that they will select a suitable tool, implement the tool, train people and issue instructions that it will be used and everything will turn out for the best. I argue that success depends on a combination of carrot and stick and consistency of managers. If you don't get it right at the start, you have another chance after a few months, but if you don't take it, it's going to be awfully hard to get people to come back to the tool. And that's where no persuasion works, just the whip."

Concludes the purchasing director of a smaller manufacturing company, "It's also about experience. It's also about learning by trial and error when you first implement e-procurement. But when you're introducing another tool, you know what to watch out for, what to prepare for, you anticipate passive resistance before you go live, you communicate well. I don't believe you can learn this from books."

Be decisive in the implementation phase

Therefore, the manager has to be decisive in the first phase of implementation and sometimes use "brute force" to get the team to use the tool and then make sure that the buyers do not revert to old practices. This period can be relatively short, with one customer it was only a few weeks when the manager simply did not budge and insisted on running all tenders through the e-sourcing tool. For another customer, the process followed a commodity-by-commodity approach: raw materials went into the tool first, followed by packaging and then spare parts and services. For office supplies. A few purchasing categories are still made outside the system because they are small "once and never again" transactions where it does not make sense to register the supplier.

For inspiration, here are the comments of three managers. The CEO of a manufacturing company: 'We introduced e-sourcing and in the first three months there were three selections. There was always a reason to do it outside the system - we don't have time, the supplier doesn't know how to submit a bid, the internal customer has already emailed the drawings. So I banged the desk and tied the tool to the premium, instructing the purchasing manager to enforce 0% exceptions with her team. ... Today, we are at 100% and the buyers are complimenting themselves. But I know if we loosen up, they'll start bypassing the electronic system again. They haven't got the hang of it yet and they still see it as a bit of an edict from above, which they are against on principle."

The purchasing manager of a large bank adds: "A tender today cannot physically take place outside the system because it simply cannot be approved. And in order to get people to use the full potential of the e-sourcing tool, the process will not allow them to move to the next stage unless they take steps that we consider good practice, such as approving the tender strategy, internally reviewing the specification, checking the creditworthiness of the supplier and thinking about other tenders. Sometimes it delays, but we are protecting the buyer and the internal customer from unnecessary mistakes."

An alternative approach was chosen by the purchasing manager of an energy company: 'I had the luxury of hiring consultants for a year who led the purchasing managers by the hand, set everything up for them, showed them directly at the workplace, explained it ten times. Fortunately, we negotiated this service together with the software, so I didn't have to find a budget. I can't imagine pushing this through without external resources.

Take responsibility for the further development of the electronic tool

An advertorial would now say that all customers are excited about e-sourcing and all are literally eager to add functionality, to go into more sophisticated tendering, to use the tool to its 100% potential. The sad reality is that buyers are not eager for anything like that. On the contrary, they stick to the tried and tested procedures, and even well-intentioned attempts by software providers to show the benefits of two-round tenders, the benefits of multi-criteria auctions, etc. do not change this.

In other words, even system development is primarily the responsibility of the purchasing manager, who should combat operational blindness through three tools:

• purchasing conferences to inspire good practice from diverse industries and different types of purchasing organizations.
• the experience of an e-tool provider who cooperates with many clients and can competently point out hitherto unidentified problems and opportunities,
• experts, consultants, scientists who set the direction in the field of digital transformation of purchasing.

Let's add that quality information cannot be free, someone always has to pay for it. So with a conference, ask if and how much the presenters paid for their talk, with a vendor of purchased software remember that they too have to earn something to provide quality service, and with consultants and experts, assume that whatever they publish for free is pure marketing and no qualified advice. Only paying customers get the best ideas.

Conclusion

Implementing electronic tools in purchasing is not at all as easy as the vendors of purchasing software suggest because, unfortunately, people have a natural aversion to novelty. Purchasing managers have an irreplaceable and essential role in their selection, implementation, and further development. Promitea's experience shows that managers must be consistent, decisive and persistent, i.e. create suitable conditions for the introduction of the e-tool, insist on its use, systematically work on its further development so that the purchasing department makes maximum use of its potential.