Streamlining procurement: technology as an enabler of transformational change

Streamlining procurement

Technology and automation are helping leaders streamline longstanding processes and facilitate behavioral change

Principal, Americas Practice Leader, Operations Advisory

KPMG LLP (US)

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Among the five major concerns identified by public sector leaders in the recent KPMG International Global Transformation Survey 2016, barriers in organizational culture were cited as the biggest threat to large-scale change initiatives. A reflection of the prevailing culture, employee behavior can serve to reinforce inefficiencies within key functions, creating significant obstacles to transformation. And while changes in employee behavior and securing buy-in remain the surest route to successful transformation, the role of technology in such efforts should not be underestimated. In particular, the ability to automate certain manual processes can create opportunities for the redeployment of workers into strategic tasks. This enables them to deliver greater value to the organization in addition to helping with employee morale and retention. A recent (and ongoing) collaboration between KPMG in the US and the Metropolitan Transport Authority (MTA) illustrates how technology can help pave the way for larger-scale, enterprise-wide transformation.

Procurement as a change leader

The MTA decided to undertake a procurement review sponsored by the organization’s incoming Chairman and newly appointed Chief Procurement Officer (CPO). Procurement was until then divided into eight separate groups operating fairly independently. While there had been a certain degree of collaboration amongst some of the agencies, there was a general recognition that there was room to improve, and an opportunity to make procurement become a more strategic partner. Instilling a ‘One MTA’ mindset across the disparate agencies would allow the MTA to adopt a common set of procurement processes and tools driving efficiency and standardization. It would also allow for the negotiation of better deals with their vendors by leveraging the purchasing power of MTA vs. that of the individual agency. This would help reduce costs, improve supplier performance, reduce cycle times, increase efficiency and help procurement become a better business partner to the agencies.
 

Building the recommendation

To gain the required insight to develop our recommendation, the KPMG team held a series of workshops across the various MTA agencies to analyze processes, tools and skills. They unearthed 360 unique issues based on which the team identified 53 improvement initiatives. For example, they uncovered the prevalence of unnecessary manual processes in key areas and the sub-optimal use of technology, behaviors which contributed to low efficiency and presented considerable obstacles to delivering value. Based on the MTA’s specific business requirements, the KPMG team helped them select a fit-for-purpose technology platform that would meet their needs and drive standardization and process harmonization across the function’s disparate agencies. Processes would be standardized by as much as 80 percent, with 20 percent left to address local agency requirements.
 

Addressing challenges with technology

Technology would not be the solution itself, but rather the enabler of change; in this case, freeing up talent to focus on supplier management and ‘internal’ customer satisfaction. From the supplier’s perspective, this would help the MTA become an ‘easier organization to do business with’.

Automating PO generation processes, leveraging catalogs and streamlining approval workflows facilitates an automated ‘hands free’ ordering process, beginning with an employee identifying a need and ending in payment. This is projected to reduce the procurement cycle time by nearly 20 percent, and raise the number of POs generated from 500 per month to 800. Over 125,000 sourcing events are expected to be conducted via the technology platform representing a 42 percent increase. Nearly 12,000 active suppliers are targeted to be enabled via the self-service portal, allowing them to check the status of their invoices and bids at their convenience, and without manual intervention.

Technology-driven process enablement allows the group to adapt to functioning as one cohesive function, creating the potential for better contracts with strategic suppliers and better value for MTA, as a whole.

Automating for success

By automating several aspects of the Purchase-to-Pay (P2P) process, the MTA has been able to make a significant impact on overall procurement efficiency and effectiveness. The positive effect has also been felt by finance as more accurate POs upfront have resulted in fewer invoice exceptions downstream. In leveraging automation to deliver ‘One MTA’ purchasing power, the KPMG team has helped create a more streamlined, processes-efficient procurement function, and crucially, laid the ground for the next phase of the MTA’s wider transformation.
 

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