In 2016 one of the world’s largest telecom providers, Vodafone, decided to transform its procurement department into a world-class purchasing organization. After only six months the team surpassed their target with a perfect purchase order (PO) rate of 85%, exceeding the Hackett Group’s 80% standard for world-class.
Since then, the department has achieved an astounding 92% perfect PO rate. They also drove down their process costs by 11% and improved time to market by 20%. How did they spend less and hit the market faster in less than a year? They used process mining technology.
When we look at what drives Vodafone and other companies to make procurement process improvements, we find familiar pressures: cost savings, risk management, product and market expansions, and increased cash flow.
Although procurement leaders can use their inherent pragmatism to thrive in today’s climate of elevated expectations and risk, a critical aspect of that pragmatism is recognizing opportunities to transform. Looking from without to within, astute procurement leaders can only achieve meaningful change when they address talent capability, business collaboration, data quality and integration, risk management and supplier collaboration, supply chain agility, and organizational compliance.
These success factors aren’t new. But with uncertainty as the new normal, high-performing procurement teams are embracing digital solutions with a process-first approach. And the right technology–like process mining–can act as the catalyst for meaningful change not only within procurement, but in departments across an organization.
That brings us to two important questions: What is process mining and how does it work for your procurement process?
Each time users interact with any of their company’s IT systems, their activity is documented. With multiple dimensions tracked on each of those actions, companies quickly find themselves with an enormous collection of information (“big data”). This is where many analyses falter.
But process mining software sifts through all of the big data in your company’s IT systems to visually reconstruct a process in all of its variations. With its ease of connection and ability to show not only where the deviations lie but why they occur, process mining is a powerful tool for any process improvement initiative of any size, on any system.
The technology also offers real-time, objective insight that helps everyone to work from a common understanding, all while driving increased savings. That’s how Vodafone was able to make their changes–by treating their procure-to-pay process like a patient, and using process mining analytics the way a doctor would use an MRI scan to diagnose issues.
And what about those success factors for procurement process change? Process mining helps free talent from rework to focus on strategic initiatives; offers the objectivity and visibility needed for effective collaboration; works with your existing data; identifies supply chain patterns and potential problem areas; enables the quick read of a situation and ability to adjust accordingly; and roots out non-compliant behaviors that may be costing time and money.
We’ve only just scratched the surface. Process mining opens up a world of opportunities for procurement teams to propel themselves and their operations to the leading edge of efficiency.
This post is an adapted excerpt from a recent white paper on procurement and process mining. For more information and specific examples of how process mining can help make the most of your procurement process, read the full white paper here.
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