Among the host of buzzwords and desired practices used in the procurement world – sustainability, anyone? – “end-to-end” procurement surely ranks amongst the top of the list.
But…what does it mean? It’s easy to say, no doubt, and might make you sound clever in the boardroom – but what good is a critical topic without some context? And, how does an end-to-end procurement solution help facilitate end-to-end procurement?
First a definition of “end-to-end” from Investopedia: “A term used in many business areas referring to the beginning and end points of a method or service. End-to-end theory embraces the philosophy that eliminating as many middle layers or steps as possible will optimize performance and efficiency in any process.”
In the context of the procurement world, “end-to-end” refers to the practice of including (and analyzing) each and every point in an organization’s supply chain – from sourcing and ordering raw materials to the point where the good reaches the end consumer.
Such a process, of course, includes many points, but it is critical to include all of them.
So…why is this important? What benefits can be derived from developing an end-to-end procurement process?
Our friends over at the Chartered Institute of Purchasing and Supply have put together a great introductory list:
- New opportunities for close liaison with key suppliers and their key customers, supported through the use of IT;
- New legal, consumer and ethical demands on the supply chain – for example, the emergence of the preference for organic food, the avoidance of child labour and compliance with environmental targets and legislation;
- The drift of branding (and hence the of product responsibility) from the manufacturer to the retail level;
- The number of mergers within industry and the rise of multinationals gave certain parties an increasingly dominant position within their supply chain.
In sum, using and end-to-end procurement process will give an organization of full, detailed look into everything that is happening in its supply chain.
In the past, the view of procurement may have simply been to ensure the lowest-priced contracts possible, with little regard for the mechanisms at play within the supply chain that facilitate those contracts (child labor, destructive environmental practices). But now, procurement professionals need to know everything that is happening in a given supply chain to ensure any negatives are mitigated or erased.
Okay, so we’ve covered the concept. And it sounds good – but how does it all come together? How does an organization manage an end-to-end procurement process?
Well, there are a few ways – a dedicated procurement staff keen on observing and recording all data pertaining to its supply chain.
How that data is managed, however, is a, arguably, the most critical component to an end-to-end procurement process – using an end-to-end procurement solution.
What is an end-to-end procurement solution? Simply put, it is a software solution that fully integrates into an organization’s supply chain and provides procurement professionals with a clear look of, at the very least, its spending on and receiving of goods. It looks at all of the data a company gleans from its end-to-end procurement solution, and it will learn how long goods are taking to be sent from suppliers and how much those goods cost. If there any suspicious price fluctuations or extended wait times, a procurement professional will know to investigate.
Another critical benefit of an end-to-end procurement solution is its inherent efficiency and accuracy. Cataloging every piece of appropriate data in an end-to-end procurement solution will, without a doubt, save an organization time and money. In the costly and intricate world of procurement (and, by extension, supply chain) those advantages will come in handy.
Finally, when choosing an end-to-end procurement solution, make sure to do your research and test a number of the solutions out there. Earlier, I mentioned that an end-to-end procurement solution should fully integrate with your supply chain. That is true – but supply chains are different for different companies. Choose the end-to-end procurement solution that best meets your needs. Considering all of the aforementioned benefits, you’ll be glad you did.