Spot on: providing agile consumer-like choice in a business environment

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Known unknowns – Donald Rumsfeld’s phrase once pertaining to defence strategy, has today taken on new meaning in the business world. This semantic change comes as companies face increasing disruption. And even operationally, more safeguards are needed to plan for predicted, yet unknown bumps in corporate roadmaps such as delivering efficient and timely support for consumer-like choice, for example.

As a consumer, if you need to replace a phone, you can order online and wait for three-day delivery or pay for overnight. But what do you do as a business when you need an ergonomic chair for an employee who is starting tomorrow or imprinted items for a trade show in two days?

Managing such unplanned, time-sensitive and often mission-critical purchases – also known as “spot buys” — can be a difficult, expensive and risky process.

And yet indirect spend in this area accounts for 20 per cent of purchases made by the average company. All of this in an environment where procurement policies can take from six to 30 weeks. And they are largely undermanaged because most companies lack effective tools to facilitate the time-sensitive supplier identification, qualification, and amount of bidders necessary to secure them.

Without a solution in place, employees go off and do their own thing without involving procurement or applying any spend management rigor. It means many companies are leaving significant savings on the table.

There are plenty of sites where companies can find industrial products and office supplies and buy them with a few clicks. But this only solves part of the problem. Instead, spot buying software offer a way to search for suppliers and search for goods in external B2B catalogs that aggregate the results into one place.

These networks and the software underlying them can deliver the content and expertise organisations need to gain greater visibility into their tail spend and fuel the compliance necessary to get unplanned buys under control.

Most searches look something like this:

Find: If an item isn’t listed in a company’s catalogue, a consumer can search online catalogues populated with billions of listings and thousands of categories to locate it.

Approve: Through configurable business rules and spot buy-specific workflow, customer purchases are automatically aligned with corporate policies and routed for approval.

Buy: Approved purchases trigger checkout, secure payment and shipment of goods.

The result is much like it would be looking at a digital marketplace as a consumer.

Additionally, there are benefits too for those selling organisations, for example, access to a previous unattainable global network of buyers who spend billions on indirect goods and services every year.

Extended reach into lower-dollar tail spend as well as some higher-dollar, one-off purchases is the reason why many businesses are turning to spot-buying as a reliable, compliant alternative to individual one-off sourcing.

Tony Alvarez, General Manager, SAP Ariba