3 Effective Ways Procurement Can Transform with CRM
In his recent Spend Matters post, Stan Garber described how Sales organizations have leveraged customer relationship management (CRM) platforms from providers like Salesforce to achieve higher levels of success. With CRM-enabled pipeline management, Sales has become better able to forecast results, identify which deals are stuck, improve their sales process, and better coach team members to achieve successful outcomes. Stan says that Procurement Executives can usher in a new era where they can better establish priorities, allocate resources, engage stakeholders and react to changing directives by emulating this pipeline-focused approach. We at LUPR agree and would like to suggest three more features of CRM that are transformative for supply management.
1. CRM Powers Procurement-Supplier Communities with Real-time Data
In a traditional corporate communication model such as email or IM, I push a message to you, I wait, you send a response, you wait, and so on. Instead, CRM enables users to follow categories, suppliers, issues, and projects, pulling automated streams of real-time information they need to be informed and effective in their work. Examples may include an award of business to a new supplier that yielded a great result in another business unit that could benefit your organization. Conversely, an engineer may learn about quality issues that have arisen in equipment installed at a plant and hold further orders from that supplier until those issues are resolved. Neither example relies on a colleague to CC you on an email to get this news. And after the automated notification, you can easily engage in threaded discussions related to the topic with colleagues and members of your supplier community.
2. CRM Supports More Effective Relationships by Enabling a Corporate Memory
We talk about fostering more effective supplier relationships, but people can’t have a truly good or bad relationship without knowledge of past shared successes and failures. As a result, we can expect our businesses to suffer when those in the buyer-supplier relationship lack knowledge about what has transpired in the course of their business partnership. Examples of knowledge gaps may include contracts that are expiring or which strategic supplier or key stakeholder hasn’t been met with in months. We may be unaware of which good supplier we are in danger of overloading with too much business or who at the supplier is currently managing our account. The Bureau of Labor Statistics reports that Americans are spending less than three years in a job on average. This makes it more and more difficult for procurement teams to cultivate the knowledge and relationships they need to be effective. Gene Richter, the CPO who led IBM’s transformation in the 1990s, is well known to have said, “business is done between people, not businesses”. CRM enables discussion groups, alerts and a better overall means of knowledge management and transmission to foster effective relationships among colleagues and business partners.
3. CRM Helps Procurement Save Time as well as Money
Those who work with data spend up to 40% of their time collecting it before even starting to analyze it. After analysis, supply managers need to take the extra step of negotiating cost reductions or driving supplier performance improvements based on what they learn from their data. CRM integrates easily with ERP and third-party systems to bring all your data to one place. The preparation of weekly or monthly reports is automated since activities and KPI performance are transparent and real-time. And CRM helps buyers identify valuable opportunities in their data via criteria-based searches. For example, a manufacturer needing to replace their widget source can easily use their CRM system to understand which widget suppliers are approved and within a 4-hour drive of their plant in Kokomo, Indiana. It could also help a manufacturer find minority-owned suppliers in a particular category in their region. They can know the answers in seconds instead of having to search through drives or rely on anecdotal recommendations from coworkers. Taking action is a snap with document templates and email integration that ensures critical communications to suppliers and stakeholders are done in a consistently high-quality manner versus the old free text email.
Of course, due to its origins as a sales and marketing toolset, CRM isn’t optimized for the supply manager right out of the box. But with a procurement customized CRM, which is what we’ve created in LUPR, Procurement can manage its savings pipeline, key stakeholder and supplier quality and performance in a dramatically more simple and effective way.