In today’s extremely competitive environment effective supply management has surfaced as a competitive advantage allowing your organization to separate itself from the competition. The first step in building a world class supply management organization is reviewing and analyzing your procurement processes. Do those processes align with the business’ overall strategy? Have your procurement processes been streamlined, removing wasted and unnecessary time, effort, and costs? Have you implemented the appropriate technology to take those procurement processes to the next step, allowing you to react in a timely, efficient, and cost effective manner to changing customer demands and market volatility?

I’ve spent the last fifteen years working with the PeopleSoft procurement modules. This suite of modules provides you with the necessary functionality and technology to build a world class supply management organization. The SRM suite consists of six modules: Purchasing, eProcurement, Services Procurement, Strategic Sourcing, Supplier Contracts, and eSupplier Connection. The effective use of these modules can have a positive effect on the bottom line by both cutting costs and increasing revenue. The following items identify many of the features that enable you to achieve those positive results.

eProcurement

  1. eProcurement helps reduce out-of-system purchasing, also known as maverick purchasing, through the purchase of goods and services in a controlled procurement environment.
  2.  PeopleSoft eProcurement helps enforce contract purchasing, thus reducing overall spend, as well as capture spending information for future analysis.
  3. By improving requisition creation and usage, employee training is simplified, which reduces the total cost of ownership.
  4. eProcurement reduces procurement cycle time and the need for expediting purchases which in turn reduces overall costs.

Services Procurement

  1. Services Procurement facilitates the procurement process and provides the ability to create role and skill specific requisitions, source the requisition to suppliers in the supplier network, and qualify and procure service providers.  This enables your firm to identify and procure the best qualified service resources at the best prices.
  2. Services Procurement administration enables management of the ongoing work process by providing project and activity definition and enabling service providers to log time and status information thereby reducing your administrative costs.
  3. Self-invoicing ability and creating invoices based on approved timesheets, progress logs, and expenses streamlines the billing process and reduces costs.
  4. Interactive reports against a data mart analyze supplier information to help manage and minimize your services spend.

Strategic Sourcing

  1. The ability to establish bid factors, business policies and constraints allows you to rate and target the vendors that best fit your business requirements.
  2. The ability to create online events, invite bidders leveraging the web and allow them to register and enter their bids online, allows you to streamline the bidding process and minimize costs.
  3. Strategic Sourcing accommodates multiple rounds and versions of an event allowing you to conduct your bidding event in an iterative manner and drive down your unit costs.
  4. Strategic Sourcing allows for sell events enabling you to increase revenue through the sale of depreciated assets.

Supplier Contract Management

  1. Supplier Contract Management allows you to create contract libraries, document configurators, and user defined wizards to facilitate and streamline the contract generation process thus reducing the costs of contract creation.
  2. This module provides the capability to link transactional contracts in the Purchasing module to authored contracts thus minimizing errors that may occur from transposition of data.
  3. Supplier Contracts allows you to use milestones enabling you to monitor and track deliverables against your contracts and enforce contract compliance thereby ensuring you’re paying the lowest prices.
  4. Supplier Contracts provides the ability for the contract administrator to collaborate on-line with both internal users and suppliers minimizing disruptions to the contract development process and reducing cycle time.

eSupplier Connection

  1. eSupplier Connection provides self service capabilities to your suppliers allowing them to update their business information such as address, phone, and contact data.  This reduces your administrative expenses.
  2. This module can be used to allow your suppliers to view information related to their orders, receipts, invoices and payments, thereby reducing the amount of time your purchasing resources must spend researching the supplier’s requests for information.
  3. Suppliers can use eSupplier Connection to pass you transactional information such as responses to RFQ’s, PO acknowledgements, and advanced shipping notices.
  4. The ability to make back end enterprise information available to your suppliers improves collaboration, reduces supplier response time, increases employee productivity, allows for faster and more accurate decision making, and better customer service from the supplier.

Purchasing

  1. The Rebate Claims Management feature in Purchasing enables you to track rebate payments made to your company and any outstanding payments due from the supplier, thereby improving your opportunity to increase revenue.
  2. Commitment Control allows you to track expenditures ensuring you stay within budget.  In addition workflow can be used to notify the appropriate personnel who can override the budget constraint if necessary.
  3. Workflow is available to notify buyers when their contracts have expired or reached their maximum monetary amounts.
  4. The use of the Procurement Card functionality can reduce the number of small purchases handled by the purchasing department thus reducing administrative costs and allowing your purchasing department to focus on more value added activity.
  5. The Request for Quote functionality allows you to put purchases out for competitive bidding.  RFQ’s integrate seamlessly with requisitions, PO’s, and contracts which in turn reduces cycle times.
  6. The automated sourcing process allows you to source your purchases to suppliers based on several different criteria, including but not limited to, price, lead time, where an item will be shipped, and vendor priority.  The various options allow you to source to the most cost effective vendor and reduce procurement cycle time.
  7. The ability to transmit purchase orders in an electronic form reduces cycle times.
  8. Inspection and return to vendor functionality enables you to verify you’re not being charged for defective items.
  9. Procurement History Analysis enables you to track procurement trends and manage vendor relationships to assure you’re procuring goods at the lowest total cost.
  10. Purchasing workflow can be used to automate information flow and enforce business rules, thus, streamlining and standardizing procurement processes and reducing costs.

Before you address the technology aspect of your supply management organization take the time to review and analyze your current environment.  Benchmark your environment against best in class organizations.   The implementation of new technology is always much more successful when it is preceded by a redesign/reengineering effort addressing your policies, procedures, and workflows.  Once you’ve addressed these aspects of your supply management organization you’re in position to address your supply management technology.

If you’d like more information regarding either the redesign/reengineering aspect of your supply management organization or the PeopleSoft SRM modules please feel free to contact me.

For those of you that have implemented any of the PeopleSoft SRM modules or gone through a redesign/reengineering effort please share those experiences with the other readers of my blog.

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