Boost Compliance & Cost Savings With P-Card Data
While Procurement Cards and T&E Cards (we'll just call them P-Cards for simplicity) offer a convenient way to manage expenses. If you're not keeping a close watch on P-Card spend, you're missing out on a critical piece to protecting your procurement policies, investments in technology, negotiated pricing, and rebates. We'll highlight how the regular analysis of P-Card spend helps identify procurement issues such as spending outside your eProcurement system, off-contract or rogue spend, and non-compliant spending. We'll also share common reasons for these issues, based on survey results and conversations with P-Card holders, and how you can leverage these insights in your own organization.
Were you here to learn more about fraudulent spending? Well, you can find out more about that here: Is Fraudulent Spend Happening in Your Business? and here: The Hidden Menace of P-Card Fraud in Schools
Identifying Trouble Areas in Procurement Processes
P-Card spend analysis and audits aren't just about crunching numbers. They’re a gateway to understanding the behavior and choices of individuals within your organization when it comes to procurement. Our experiences from numerous P-Card analyses and audits have provided us the opportunity to connect with individuals who have, sometimes unknowingly, stepped outside procurement and P-Card policies. A significant number of purchases that should have gone through eProcurement systems or specific contracted suppliers like Staples, Grainger, CDW, W.B. Mason, and countless others, took a different route.
The revelations from our surveys and one on one discussions with these buyers have been eye-opening. Most P-Card holders who engaged in off-contract or rogue spending fell into one of four categories:
Unaware of Contracted Suppliers: They didn’t know there was a contracted supplier for the items they were purchasing.
Price-Savvy Shoppers: They were on a mission to find the best price, aiming to be good stewards of the business.
Out-of-Stock Dilemma: The contracted supplier was out of stock, pushing them to look elsewhere.
eProcurement System Challenges: They found the eProcurement system hard to navigate and opted for a simpler option.
Each of these categories points to different facets of the procurement process that may need attention. Regular analysis of P-Card spend can unveil these patterns, helping to identify areas where education, training, or system improvements could significantly impact compliance and cost savings.
Wondering why fraudulent spending isn’t on this list? While fraudulent spending exists, and can be uncovered by a P-Card spend analysis, it’s not one of the top reasons for people going outside of policies. We’ve found that most people are not bad actors, they simply don’t know the policies or are just trying to find the items they need at a good price without much complexity.
Uncovering Poor Pricing From Contracted Suppliers
Regular P-Card spend analysis can also uncover frequent purchases from a particular non-contracted supplier. This information could be a catalyst for negotiating new contracts or exploring alternative suppliers who can provide better pricing or terms.
A Tale of Compliance and Cost-Savings
A Fortune 1,000 organization dove into their P-Card spend and stumbled upon hundreds of purchases on Amazon, which wasn’t an approved supplier at the time. A targeted survey of employees who purchased office supplies on Amazon revealed that pricing, particularly for toner, drove the off contract spend. With this newfound insight, the office supplies Category Manager renegotiated pricing with their vendor and informed the buyers who previously shopped on Amazon of the new pricing they helped secure. Post renegotiation, a P-Card spend analysis and purchasing audits showed that compliance soared to an all-time high.
Unveiling eProcurement System Challenges
eProcurement systems are hailed for hosting catalogs with negotiated pricing, streamlining approval workflows, integrating invoicing processes, and bolstering oversight. However, despite these advantages, buyers often encounter hurdles that prompt them to sidestep these systems for smaller purchases. The ease and speed of using P-Cards becomes enticing, sometimes to the extent that employees are willing to leave their desks, and venture outside to make necessary purchases, inadvertently contributing to productivity loss.
Uncovering the reasons behind this avoidance is crucial for rectifying the issues and ensuring that your investment in an eProcurement system is fully leveraged. Regular P-Card spend analysis is a beacon in this quest. By identifying individuals who frequently opt for P-Card usage over the eProcurement system, you can uncover the root causes of this preference. Our findings have unearthed a variety of user experience issues:
Confusing Help Messaging: Some users find the help messaging within the system confusing, leaving them uncertain whether their order will be processed, or delivered to the right address.
Overwhelming Interface: For others, an overwhelming main page deters them from going any further and instead, choosing a local store or an online store you may have never heard of.
Unintuitive Steps: Some users get frustrated and simply give up when hit with in unintuitive steps, avoiding the ePro system at all costs in the future.
Approval Delays: Approvals are not always turned around the same, or even next day, slowing down how quickly the buyer will receive their items. These delays push buyers to a quicker option – their P-Cards.
Addressing these issues isn't just about improving the eProcurement system; it's about reinstating confidence and ease of use for your buyers. It's about ensuring that the system serves as a facilitator, not a deterrent, to compliant procurement practices. Remedying these challenges, based on the insights from a P-Card analysis, is a stride towards enhancing user satisfaction, compliance, and overall procurement efficiency.
Discovering New Suppliers for Negotiation
Regular analysis of P-Card spend doesn’t just spotlight issues; it also unveils potential opportunities. By identifying spending with non-contracted suppliers, organizations can discover new suppliers who may offer better pricing or terms.
Navigating towards a Rebate
A global manufacturer faced a hurdle when their office supplies vendor informed them that they were falling short of the spend threshold required to maintain their negotiated pricing and putting their rebate in jeopardy. An in-depth P-Card analysis revealed that over 30% of their more than $1M of office supplies spend was channeling through other vendors like Amazon, Walmart, and random e-commerce sites. Armed with this data, the procurement Director and Category Manager worked with their supplier to keep the negotiated pricing in place and re-evaluate the rebate during the upcoming renewal. Through buyer education, policy updates, and continuous P-Card analysis, they managed to steer the organization back on track towards achieving the rebate, showcasing the power of informed supplier negotiations.
The Path to Optimized Procurement
The journey towards optimizing procurement processes is ongoing. Every analysis, every conversation, and every policy tweak is a step towards a more compliant and cost-effective procurement ecosystem. It’s about fostering a culture of informed spending, ensuring that every dollar spent aligns with your organization's procurement policies and objectives. Regular P-Card spend analysis is a cornerstone in this journey, offering a clear lens to view the procurement landscape, identify issues, negotiate better contracts, and drive continuous improvement.
Unleashing the full potential of your procurement processes requires a blend of continuous analysis, education, and system improvements. A P-Card spend analysis is a powerful tool in this endeavor, offering invaluable insights to fine-tune your procurement strategies, engage with suppliers effectively, and ensure your eProcurement system is user-friendly and serves its intended purpose.
Discover what a P-Card spend analysis can do for your organization at ProcurementIntel.com or Contact a Spend Analyst to see if we can help you boost compliance and cost savings with a Spend Analysis.