How the right framework can set you up for audit success
Introducing new procurement technologies often comes with the temptation to immediately jump in and take a new broom to sweep out your supply chain from top to bottom.
However, there are a few things to line up before you start a complete audit of your systems, including having a transparent framework for how and why the audit will take place.
With so many moving parts in play for established organizations, a spend audit is the logical step to ensure your supply chain meets the needs of your business and the consumer demand for ethical procurement practices.
Why run an internal procurement audit?
Gain genuine transparency over your complete supply chain
Set performance benchmarks - know what moves the needle
Identify process and efficiency improvements - continuous monitoring breeds continuous improvement
Stay compliant across global jurisdictions
Boost the employee experience in a competitive talent marketplace - procurement professionals need the right tools and governance to operate effectively
Identify your risks and vulnerabilities - before your competitors do
The 3 pillars of any spend audit
People - talking to those involved in your spend activities to uncover any concerns
Process - looking at current processes and procedures to identify any issues
Platform - analyzing procurement tools to ensure they are fit for purpose.
When all three work well, your organization has the best chance to stay compliant, cost-savvy, and work with ethical suppliers. Fall short, and your procurement processes may put your organization at risk.
Creating a custom audit checklist
There’s a lot of common compliance and business metrics most companies track - but every business ultimately has a unique supply chain profile. Start with a checklist of the basics - and then see how much further your technology can take you.
Get started with:
Everyday purchasing - PO generation, workflows and processes
Suppliers - contract negotiation and management
Onboarding - do your suppliers know what’s expected
Fraud prevention - what prevents theft or improper spending
Authorization - check who has approval powers and any anomalies
Invoicing and payment - are they accurate, compliant and fraud-free
Reporting - plan how you’ll track your auditing information and transform it into actionable insights
Step 1: People
Talk to everyone involved in procurement and contract management for a 360-degree view of how things are currently working. The people using your systems and working with suppliers every day are the keepers of critical IP — they’ll know what’s going right, what’s not, and where known issues are lurking.
Through team and 1-1 sessions — anonymous feedback — take the time to listen to potential issues and their impact when onboarding and managing suppliers.
The on-the-job perspective is critical and needs to be supported by training, processes, and a look at your team structure to ensure the right people are in the right positions.
Step 2: Process
Using information you’ve drawn from your people, the next step is evaluating existing procurement and contract management processes. In many cases fragmented, outdated or missing processes leave the door open for unethical practices and unacceptable organizational risk.
Conduct a full review of supplier onboarding practices, including management of purchase requisitions and day-to-day procurement tasks. Your processes may be intact — but there may be ways to simplify processes so staff get the breathing space they need to stay on top of background checks, compliance, and other due diligence.
Your process audit can help improve processes and productivity, so your organization is meeting spend, sustainability and supplier goals.
Step 3: Platform
Research shows that organizations spend between 30-70% of their revenue on procurement and external expenditure. If you are using outdated tools or relying on cobbled-together legacy systems, chances are you’re not getting value for money.
Procurement and contract management isn’t set and forget; it’s smart to schedule regular reviews of your systems and tools. Are they working together? Are they still fit for purpose? Are they providing a single supplier view? Or are you locked into a vendor arrangement that’s no longer up to scratch?
Accuracy and transparency are non-negotiable, and AI technology is unlocking purpose-built spend analytics that bring a new level of lower-risk procurement.
Imagine doing a complete internal procurement audit using legacy systems, paper files and inevitable human error at a simple or a strategic level. An AI-powered platform can streamline the process and trim the need for data entry, cleansing, categorizing, and analysis that results in spend intelligence you can use.
With a system that allows you to set up your own custom categorizations, risk notifications, and supplier configurations, an audit can be a regular and real-time event rather than a dreaded once-a-year epic undertaking.
Automation will transform your everyday procurement operations - from POs to supplier due diligence - and have your company ready for the future of procurement where your credibility will depend on how you do business.
How well do you really know your suppliers? Download Robobai's latest whitepaper and discover the hidden truth in your supply chain.
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