From complexity to clarity: The role of enablement services in procurement

Procurement operations play a critical role in supporting a procurement organization's strategic goals by managing the administrative aspects of sourcing and buying activities.

From processing transactions such as purchase orders and invoices, to enabling purchasing content, contracts and suppliers, procurement operations enable efficiency and compliance in purchasing activities. This fosters supplier collaboration and supports other procurement functions, such as category management and sourcing, while effectively resolving transactional queries from buyers and suppliers.

But of all its responsibilities, enabling contracts, catalogs and suppliers is one of the most important aspects of procurement operations.

After a category or sourcing manager negotiates a contract, it needs to be set up in the purchasing system so business users can easily make purchases against it. This process involves defining the right buying methods, such as ad hoc or non-catalog purchase orders, direct invoicing to the contract, purchasing card, or scheduling agreements. Contract enablement helps ensure that the new agreement is linked to the appropriate buying channel for smooth execution.

After this process, the contract becomes available for purchase, and buyers understand the correct buying process.

Consider the example of a category team finalizing a contract with a relocation service provider. Because the cost of each employee relocation varies and might not be known upfront, creating a purchase order for every instance would be impractical. To streamline the process, the contract is configured for direct invoicing.

This approach allows the service provider to submit invoices referencing the contract, while the e-procurement system automatically validates the invoice details against the contract terms, facilitating compliance and accuracy.

Catalog enablement is often part of contract enablement but can also occur independently, such as during catalog maintenance or when enabling the company's internal catalog.

Catalogs might be provided as part of the contract or by the requester or by the supplier. Procurement operations handle the task of loading these catalogs into the purchasing system.

Buyers gain access to catalogs within the purchasing system, enabling them to create catalog-based purchase requests. Catalogs can also be restricted to specific teams or groups, enabling compliance and limiting unauthorized purchases. Catalog-based purchases typically require minimal or no approval. For example, an HR employee can use the stationery catalog in the purchasing system to order whiteboard markers.

When a contract is finalized, suppliers need to know how to work effectively with the buyer. Supplier enablement clarifies processes such as how suppliers will receive purchase orders, submit invoices and meet requirements such as order confirmations and shipping notices.

This process might involve supplier registration on a B2B network or establishing direct connectivity between the buyer’s purchasing system and the supplier’s order processing system.

Suppliers receive purchase orders and submit subsequent documents such as order confirmations, shipping notices and invoices seamlessly. For example, if a stationery supplier is enabled on a B2B network, purchase orders created in the buyer’s purchasing system are automatically available on the platform. This functionality allows the supplier to process them and submit invoices upon fulfillment or delivery.

When procurement operations lack clearly defined enablement services in their service catalog, the repercussions can be significant:

1. User experience challenges: Without proper operationalization of contracts, category managers and business stakeholders might struggle to understand how to purchase against those contracts. This confusion can lead to buyers using incorrect methods, such as creating non-catalog purchase requests when a catalog exists.
2. Increased processing time and costs: Purchase requests might require manual review, and numerous invoices could arrive through non-electronic channels, requiring manual indexing and processing. Also, more invoices might end up in exception queues. These inefficiencies increase processing costs and reduce the savings achieved through sourcing.
3. Unhappy suppliers: Inefficient invoice processing and delayed payments can frustrate suppliers, potentially damaging strategic relationships.
4. Missed savings opportunities: Buyers unaware of negotiated contracts might purchase from unapproved suppliers at higher prices, risking compliance and receiving substandard goods or services.
5. Data integrity issues in spend analytics and reporting: Inaccurate or incomplete data can lead to misleading insights, such as misclassifying compliant spend as noncompliant. Addressing these issues might require extensive data cleansing and enrichment, further escalating operational costs.

To help ensure the effectiveness of enablement services in procurement operations, organizations should consider these recommendations:

1. Define clear service standards: Establish detailed guidelines and processes for enabling contracts, catalogs and suppliers. Make sure that these guidelines are well-documented and accessible to all relevant stakeholders. Clearly define the roles and responsibilities of the procurement team providing these enablement services.
2. Invest in technology: Use robust procurement systems and tools that support contract compliance, catalog management and seamless supplier integration to reduce manual efforts and errors. AI-powered automations can further improve efficiency and decision-making.
3. Provide training and support: Offer regular training for category managers, buyers and suppliers to help ensure they understand the enablement processes and know how to use the systems effectively.
4. Foster collaboration: Encourage open communication and collaboration among procurement teams, suppliers and other stakeholders to address challenges promptly and maintain smooth operations.
5. Monitor and evaluate performance: Implement metrics to measure the efficiency of enablement processes and continuously improve them based on performance insights and feedback. Key metrics include:
   • Contract compliance rate
   • Catalog usage rates
   • Supplier onboarding time
   • Invoice processing time and accuracy
   • Supplier satisfaction scores

Enablement services in procurement operations are indispensable for streamlining processes, improving compliance and enhancing supplier relationships. By clearly defining these services and embedding them in the procurement framework, organizations can optimize their purchasing processes, realize cost savings and drive strategic value. A well-structured enablement strategy is the backbone of an efficient procurement function, fostering operational excellence and long-term success.