Procurement teams at both small businesses and large corporations are increasingly focused on recontextualizing the procurement function as a value center for their organizations, rather than a back-room, savings-focused afterthought. To do so, they’re incorporating advanced technologies such as automation, data management and analytics,and artificial intelligence as part of their overall digital transformation and business process optimization strategies. These technologies come together in more advanced tools such as guided buying.
A one-two punch of purchasing value that both improves ROI and frees your procurement specialists to focus on strategic tasks rather than repetitive, tedious, and low-value ones, guided buying has the potential to help any business improve its spend management while building value. Once you understand its benefits and how to implement it, you, too, can take advantage of this powerful addition to the buying process to help your business reach its goals.
What is Guided Buying?
Different organizations have different purchasing needs. Some reserve purchasing capability to a select few within the procurement function itself, while others allow end users to access their purchasing systems to make budget- and role-appropriate purchases as needed.
But for businesses whose procurement specialists are responsible for both everyday tasks such as purchasing day-to-day essentials and more strategically important ones such as supplier relationship management, it can be especially beneficial to find ways to streamline and simplify the buying process so these specialists can devote more of their time and talent to high-level tasks such as strategic sourcing that have more significant long-term value for the business.
Guided buying uses automation and advanced data management tools to provide such streamlining. It is, in effect, a self-service buying environment that limits the choices available to buyers while simultaneously simplifying the buying process itself—and ensuring that every purchase is made from the preferred supplier, at the best possible pricing and terms. It also makes it possible to ensure all buyers follow the company’s procurement policies and workflows.
Companies commonly implement guided buying as part of a comprehensive procure-to-pay (P2P) software solution such as PLANERGY, which integrates with the supplier’s punchout catalog. These digital catalogs are provided and maintained by suppliers, and can be integrated in two ways: either directly through back-end integration with the customer’s procurement software, or via what’s known as a punch-out website, which still connects to the system but provides a stand-alone buying experience with its own (for example) landing page and content hosted on the vendor’s own servers. Both provide a user experience with key features similar to eCommerce sites, with the familiar search functionality, shopping cart, etc.
“Pulling real-time vendor information, pricing, and payment terms from a single place—the company’s centralized data server, using data from supplier catalogs—guided buying can improve every step of the eProcurement process.”
Benefits of Guided Buying
Pulling real-time vendor information, pricing, and payment terms from a single place—the company’s centralized data server, using data from supplier catalogs—guided buying can improve every step of the eProcurement process.
It can be customized to track and capture all purchasing data, from the initial requisition to the purchase order to submitting the order to the vendor (including approvals where they’re required, and leveled, pre-approved buying capabilities where they aren’t).
Native integration with vendor catalogs also helps streamline invoicing, ensuring all vendor invoices are routed properly to accounts payable for verification, along with any receiving paperwork that comes with the order itself.
In the same way, integration with your accounting software and other applications in your existing software environment make it easy to connect spend data with specific projects, budgets, etc. to provide real-time intelligence on actual versus planned spend.
In these ways, guided buying eliminates the need for specialized knowledge or advanced approvals for purchases that can be made by end users, providing them with a familiar buying experience while improving compliance with procurement policies.
It also builds value through better use of your human resources and improves your spend management capabilities by providing complete, transparent spend data for analysis while reducing the risk of both maverick spend and invoice fraud.
How to Implement Guided Buying
If you’re looking to make guided buying part of your procurement function, following a few simple best practices can help you get set up and on your way to building value through more strategic spending, automated workflows, and improved compliance with internal controls.
- Invest in a next-gen procurement solution. Comprehensive, cloud-based purchasing software like PLANERGY makes it easy to set up a guided buying experience.
- Set leveled buying permissions, with approval-based exceptions, for automatic routing and approvals.
- Integrate with existing supplier punchout catalogs or develop your own landing page and user experience, complete with customized search functionality based on custom buying channels created by your procurement team.
- Real-time data collection and availability for analysis needed to generate reports, forecasts, and budgets.
- Fully transparent and complete data capture to help automate and refine other important P2P tasks such as automatic three-way match.
- Support your digital transformation and business process management strategies by introducing digital technologies to your workflows.
- Use your data management and automation tools to craft a guided buying experience.
- Identify the goods and services needed to meet both direct and indirect spending needs.
- Develop buying channels/categories for goods and services.
- Identify the preferred suppliers for every channel.
- Develop and implement procurement policies to be followed by all buyers.
- Assign roles and budget levels as appropriate.
- Integrate purchase justification where relevant.
- Create tools to allow for exceptions with qualified approval.
- Automate requests and data capture to prevent invisible spend.
- Provide advanced options to request quotes or new suppliers should goods or services not already in the system be required.
- Develop buying personas corresponding to the various buying roles within your organization.
- Decide whether you will integrate vendor data via integrated punchout catalog or discrete punchout website.
- Design a buyer landing page that’s intuitive and user friendly. Provide a search function and as much relevant information as possible for each of the goods and services on offer, or, if you are connecting users with a punchout website hosted by a vendor, ensure it meets these same requirements.
- Collect spend data over time and analyze it to reveal opportunities to renegotiate for better terms and pricing, strategic partnerships, etc.
Guided Buying Helps Transform Your Procurement Function into a Value Center
Your team needs goods and services. Your procurement specialists need opportunities to leverage their advanced skills to secure greater value for your business. Guided buying frees your procurement team to work on supply chain management and other high-level procurement operations while still giving you complete visibility into your spending and providing end users with a convenient, user-friendly way to get the things they need to get the job done.
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