Building the perfect procurement strategy takes careful consideration and planning. It’s a process that can take years of hard lessons learned and refining. Don’t overlook Approval Control into your Procure-to-Pay Workflow.
Once you have everything tweaked to suit the needs of your operation, rolling out your approval process is the final piece that brings your finely calibrated strategy to life. To see your hard work pay off, you rely on the tireless efforts of trusted staff to approve the right purchases at the right time. After all, staying within your spending limits and meeting the needs of production is a complex process.
This is when personnel development gets tricky. Finding the right person for purchase approval is tough, and after years of loyal service, those valued employees are ready to move on. It’s a great opportunity to find good candidates for promotion, but replacing those valued employees with effective new hires presents a challenge.
This is one of the reasons why procurement staff sometimes needs to break spending limits. Even after years establishing a good system, staff churn (often due to promotion) can leave your strategy open to leaks. This is why maverick spending is a pervasive problem in procurement that’s difficult to remove.
Understanding Maverick Spending
Maverick spending is most damaging because it makes your indirect spend unpredictable. That unpredictability makes general budgeting less flexible and less effective in general.
However, it’s important to understand that maverick spending is not usually the result of employee incompetence. The individuals responsible for maverick spend are not trying to avoid hard work or proceeding with malicious intent.
Typically, they are trying their best to perform their jobs but fall short in their ability to anticipate future price changes and the needs of production as they evolve throughout the year. This failure to plan sometimes forces their hands in order to keep material supply up and keep operations running.
The ability to plan ahead and do this job right takes years of development and experience. That’s why finding and developing capable procurement specialists who reliably avoid maverick spending is so difficult!
Fortunately, properly applied technology can address this issue and get your procurement spending under control. This frees you up to advance your most valued procurement staff members without worrying about finding equally talented candidates to fill their shoes.
One of the most rewarding aspects of running a business is seeing your best employees succeed. Automated purchase approval software represents opens a door for you and your staff to advance together.
iApprove: Automated Approval Technology that Works
There’s a lot of information to consider when approving a purchase. Making a good decision that’s within your spending limits takes careful consideration of inventory, back-orders, prospective sales, production, and a number of other complicating factors, not to mention the specific quirks of your organization and industry.
Even the best human operators struggle to interpret this information and make informed purchasing decisions.
The best way to approach the problem is to tabulate this data and make predictions about materials prices based on market fluctuations. A clever purchasing staff can compile this information and compute optimal decisions, but a purchase approval-specific software solution is ideal for this task.
The downside of outsourcing such decisions to a software solution is the difficulty of programming nuanced spending limits and decision-guiding factors into such a system.
That’s exactly the challenge that iApprove, a ‘multi-level’ Approval Routing and Workflow Management solution, was designed to address: making complex, nuanced procurement policies not only possible to program, but easy to enter into an approval routing system.
Multi-Level Routing and Approval
The basic elements of making an informed purchasing decision are best broken into a series of steps, or levels, that take into account all of the important factors that go into making the right purchase.
Setting up iApprove to automate this complex process is a relatively simple process. It’s best to take input from the your most experienced and successful procurement staff members to get things setup and working properly.
Once in place, the system ensures that your procurement spend stays where it needs to be. At the same time, it frees up your procurement staff for bigger and better things and eliminates the risk of maverick spending.
We specialize in optimizing operations by automating labor intensive tasks and applying smart technology to gain valuable insights about your business. Contact us for more information about iApprove and Business Process Optimization.