6 Benefits of Standardizing the Procurement Process

Procurement drives innovation by allowing organizations to acquire resources needed for product and service development. Companies with strong procurement functions are 4x more likely to innovate, with the potential for 20% increase in revenue. By implementing strategic sourcing, organizations can access new technologies to drive innovation.

Procurement process standardization is the act of establishing clear and consistent policies, procedures, and guidelines for managing the procurement of goods and services. This involves defining the steps involved in the procurement process, from identifying needs and sourcing suppliers to negotiating contracts and monitoring delivery times. With FactWise, teams can streamline and standardize procurement processes to help organizations maximize operational efficiency, reduce errors, and improve collaboration internally and externally. Companies can standardize processes across their various entities and user groups, and maintain a high degree of data integrity, accuracy, and oversight across all teams. Our source-to-pay solution is built for self-serve and can be used to drive value immediately, allowing users to make on-the-go customizations to complex workflows, approval processes, and user roles.

The benefits of procurement process standardization

Increased efficiency: According to a survey by the Institute for Supply Management (ISM), standardizing the procurement process can lead to a 20% reduction in procurement cycle times.
Improved accuracy: A study by the Aberdeen Group found that organizations with standardized procurement processes experience a 30% reduction in errors and omissions compared to those with non-standardized processes.
Enhanced collaboration: A case study by IBM demonstrated how standardizing procurement processes across departments helped the company increase collaboration and reduce procurement cycle times by 25%.
Increased savings: A survey by the European Association for e-Procurement found that organizations with standardized procurement processes achieved an average of 10% cost savings compared to those without standardization.
Better supplier management: A case study by Microsoft showed how standardizing its procurement process helped the company improve supplier relationships and reduce costs by 15%.
Increased transparency: A report by the World Bank found that standardizing procurement processes can help reduce corruption and increase transparency, leading to cost savings of up to 20%.

Streamlining processes with standardization

Standardization also helps to reduce the amount of paperwork and administrative tasks associated with the procurement process. By streamlining the process, organizations can reduce their costs and improve efficiency. Additionally, standardizing the process ensures that all stakeholders understand the expectations and responsibilities associated with their role.

Standardizing the procurement process also helps to ensure that all stakeholders are held accountable for their actions. This helps to ensure that the process is conducted in a fair and transparent manner, and that all stakeholders are aware of their responsibilities. Furthermore, standardizing the process helps to ensure that all stakeholders are aware of the risks associated with the process, and that they are taking the necessary steps to mitigate those risks.

Improving quality control through standardization

Standardizing the procurement process helps to improve quality control. By having a clear and well-defined process in place, organizations can ensure that they are receiving goods and services that meet their quality standards. Additionally, by having a standard process in place, organizations can ensure that they are obtaining goods and services from reliable suppliers that meet their quality requirements.

Standardizing the procurement process also helps to reduce risks associated with obtaining goods and services from unreliable suppliers. By having a well-defined and consistent process in place, organizations can reduce the risk of receiving goods or services that do not meet their quality standards.

In conclusion, standardizing the procurement process can bring a range of benefits to organizations of all sizes and industries. From increased efficiency and improved accuracy, to enhanced collaboration and increased savings, standardization can help organizations streamline their procurement activities and improve their bottom line. By reducing errors, improving supplier management, and increasing transparency, standardization can also help organizations build stronger relationships with stakeholders and increase their reputation as a responsible and effective procurement organization. FactWise is committed to transforming the procurement journey for buyers and suppliers globally.

Stawan is the founder and CEO of FactWise. Before founding FactWise, Stawan was the NA TMT-Procurement Leader at McKinsey. Passionate about procurement, Stawan has 15 years’ experience in enabling clients of all sizes to achieve business impact via procurement.