Procurement efficiency (or lack of it) is the elephant in the room. Most experienced Procurement Managers don’t enjoy performing administrative tasks and firefighting operational issues.
And yet, poor operational efficiency in Procurement means that the typical Category Manager often spends at least a third of their time performing busywork. This is neither an effective, nor or efficient use of their time.
Typically, the value that a procurement professional contributes to a business can usually be measured either in:
- Hard cost savings, or
- Other, less tangible but equally important forms of value:
- Cost avoidance
- Reductions in energy or material consumption
- Supplier innovation
- Sustainability initiatives within the supply chain
- Third-party risk management
- Contract lifecycle management
It’s therefore fair to say that if you remove these non-value added tasks, you will increase the Procurement Manager’s operational efficiency, enabling them to deliver a third more strategic value to the business.
This happens through the freeing up of extra capacity, enabling them to perform their role more efficiently.
That’s a HUGE amount of untapped operational efficiency in procurement just waiting to be unleashed.
How to Improve Procurement Efficiency
Leading a team of skilled procurement professionals means that you’re managing knowledge workers. Your management approach must therefore take a more entrepreneurial mindset. There are way too many technocratic Chief Procurement Officers out there. Procurement has to become more visionary in our approach.
If this were a manufacturing process generating over 30% waste, it would be something that lean experts would be crawling all over.
The inefficient use of energy and resources in a factory tends to receive a lot of attention. But when it’s “white collar waste” it’s often brushed aside, or even encouraged thanks to too much process and overregulation.
Legal, HR and Sales typically have admin assistants and junior members of staff for all of this clerical work. So, why are highly paid Procurement Managers expected to perform administrative duties as part of their job?
Is the function somehow seen as being less valuable? Is it true that in 2025, we’re still seen as an overhead, rather than an asset?
Let’s look at the economic concept of opportunity cost. This is the loss of value or benefit that would be incurred by engaging in that activity, relative to engaging in an alternative activity offering a higher return in value or benefit. This is exactly what we’re talking about here when it comes to poor procurement efficiency. Procurement managers spending a third of their time on stuff that an admin assistant could do is a waste of a knowledge worker’s talent and salary!
There are 3 possibilities to increase bandwidth of procurement managers to enable them to deliver more to the business:
- Eliminate
- Delegate
- Automate
How to Eliminate Non-Core Tasks
Which processes are unnecessary?
Regulatory and compliance processes are a necessary evil. But are there ways you can simplify them?
Are processes bloated because they have been added to over time? Start with a blank sheet of paper and design from scratch, rather than modifying existing processes.
Case in point: tax codes of OECD economies. These are often way more complex than newly industrialised or markets who have had the luxury to learn from others’ mistakes.
Ask yourself: why it is that startups are so lean and agile…?
Then there are those processes that just create work for work’s sake:
- Travel approval requests: Just give each manager a budget and apply some common sense. Adults should be treated as adults.
- If a Category Manager earns $100k a year and is mandated to run complex sourcing and negotiations, surely they are smart enough to manage their own travel budget?
- Having to get 3 quotes for a one-time purchase of $5k. What’s the cost of the procurement team member’s time invested versus the end result?
- If it produces 10% cost avoidance, the resource taken up is still not worth it when considering how it could have been better deployed. These days, AI and automated sourcing and negotiation can do this!
- Requiring authorisation for a payment terms change on a low spend vendor.
- The actual negative cash impact will be so negligible that it’s a pointless waste of time. How many hours have been wasted on form-filling, emails and paper pushing?
Please, just stop this micromanagement nonsense!
Why should you delegate to the most appropriate Team Member?
This is an easy solution to implement because it requires no alignment with other functions.
Process simplification or elimination may require alignment with Legal, Internal Audit or Finance.
But delegating workload to more junior team members is fully within the control of your department and budget. What’s more, it can drive your operational procurement efficiency strategy, as well as enable you to potentially increase the size of your team while maintaining the same overall wage bill.
Here’s how we do this:
- Start off by asking your Category Managers to write down all the tasks that typically occupy their time during any given week. Include everything, even those which seem irrelevant or trivial.
- Now separate these into 3 columns: Strategic, Operational, and Transactional
- Evaluate the operational and transactional columns. How many of these tasks could be done by an Admin Assistant, Data Analyst or a Junior Buyer? They all typically earn less than a Category Manager.
Do you really need a team of 10 category managers?
Or could a team of 6 Category Managers, 2 Junior Buyers, 2 data analysts and 1 admin assistant help you deliver better results for the same overall wage bill?
Not only are you getting more headcount for the same total spend on salaries. You’re also seeing the productivity benefit of the 6 Category Managers being able to offload their busy work onto more junior team members.
Now, let’s consider a reasonable assumption that each of them are now able to deliver around a third more contribution towards team targets.
By delegating their operational and transactional work, you get a bigger team that can deliver more to the bottom line or overall business objectives.
And that’s before we’ve even looked at using any tech…!
Procurement Automation: where the magic happens
Of course, digitisation is often seen as the knight in shining armour.
But there is no silver bullet. Without a clear strategy behind it, you could be implementing a lot of expensive tech that doesn’t really improve procurement efficiency.
User adoption, change management and having a clear understanding of the relative pros and cons of each of the tech providers during the sourcing and selection process is key.
Talk to us if you could use some help with analysing the procurement software market!
Business process automation can only work in tandem with a high-performing team and a smart internal communications strategy. This ensures that internal stakeholders are persuaded to come on board with the change management agenda.
Contrary to popular belief, implementing a digital procurement strategy doesn’t require an army of consultants, a year long implementation plan or a six-figure IT budget.
Yes, there are expensive procurement software suites out there which cost hundreds of thousands of dollars and are aimed at large, enterprise-level organisations.
But there are also literally hundreds of solutions with affordable pricing, specifically aimed towards smaller or mid-market businesses. For example, we have over 440 solutions listed in our procurement software directory. Many of them are not high-end, enterprise-targeted software solutions.
More efficient output, with fewer human resources
So, let’s consider the same team of 10 from the Delegate section.
Let’s remove one more Category Manager from that team, and invest their salary into technology instead.
An approximate US salary for an experienced Category Manager according to Talent.com is $109,000, or in Western Europe around €80,000. Add on employer social contributions, and this would quite comfortably buy you two best-of-breed tech solutions to solve your most burning problems.
For example, you could buy:
1. A robust spend analytics software;
2. And a cloud-based, purchase-to-pay application with robotic process automation capabilities (with a great, mobile-optimised interface)
for the same price as the salary of a Category Manager.
Just imagine the extra savings opportunities and areas of non-managed spend that a decent spend analytics application could show you? Then, combine this with the efficiency savings of a user-friendly requisition-to-pay system that stakeholders actually enjoy using.
No more clogged email inboxes.
No more clunky ERP system to manage operational procurement.
If we’re putting user experience (UX) at the heart of digital procurement transformation, then implementing a solution people want to use is key.
Let’s also not forget suppliers too. The easier it is for them to register and use any digital tools, be it for e-sourcing, e-procurement, contract management or procure to pay software, then the more likely they are to adopt it and embrace it.
The work saved and the extra opportunities uncovered can easily deliver the results of 2 Category Managers, but for the investment in technology equivalent to the salary of just one.
But What if My Data Quality is Poor?
This sounds great, but what if your procurement data is a mess?
That’s the case in most businesses, let’s be honest. Especially those who traditionally had a decentralised procurement team or lots of data from multiple legacy ERP systems.
It certainly required attention as part of the overall project, but shouldn’t be seen as an unsurmountable barrier.
- Cleaning up poor quality data should be seen as an investment, not a cost. You need a data strategy before embarking on a digital transformation journey. Your project will likely fail if you have poor data. Over time, this investment will pay back several times over. Consider why big tech companies are so successful. It’s because they’re data companies at their heart. It’s what is behind their market cap valuations and their success.
- Now, thanks to LLMs and Generative AI, it’s becoming possible to take unstructured data and make sense of it. These don’t require a large consulting project and a huge implementation cost. Getting this right goes a long way towards data-related issues, although some manual data cleaning will almost certainly also be necessary.
Conclusion
There are many different ways to work smarter and deliver more value with the same, or even fewer human resources. A path of elimination, delegation and automation will put you on the right track.
Investing money into technology is often the first thing that comes to mind when people think of increasing procurement efficiency. However, you should also see it in conjunction with eliminating unnecessary tasks and processes. Delegating time-consuming tasks that can’t be automated to less experienced members of your team is smart business sense.
These three combined are as close as you can get to a recipe for success:
- A highly performing, fulfilled and engaged team
- Contented stakeholders
- Collaborative, engaged suppliers who are happy to do business with you
Think about it: What if your procurement team could focus on truly strategic activities?
- How much more value could they deliver?
- What innovative supplier partnerships might they forge?
- How much more could they contribute to sustainability goals?
By taking these three key steps – eliminate, delegate, and automate – you’re not just improving operational procurement efficiency. You’re applying the entrepreneurial mindset necessary to transform procurement from a tactical function into a strategic value-driving team.
