75% of businesses do not have a fully automated procurement system*, are you one of them?
Energy is a complex category, with pricing subject to the laws of supply and demand, it can be more volatile than many traded physical and financial commodities. Energy forms a sizable share of business operating costs; the table below sourced from McKinsey demonstrates that across all sectors an average of 23% of all operating budgets are spent on energy.
The complexity of fixed, variable, and semi-variable charges creates challenges for those who need to accurately model your total cost which is an essential step to effectively source and budget for energy spend. Despite this energy procurement/sourcing disciplines are much like other categories and the overall category management objective should be to minimize the total cost of ownership.
Image source: McKinsey and Company
How much has energy procurement progressed?
Procurement management as a business function is often outsourced, and these providers have been slow to change and accept technological advancements, as a result, manual procurement lifecycle practices have remained unchanged in some companies for many years. CPO’s that have not outsourced and still manage this function find that one of their biggest challenges is that their team is spending too much time on manual administrative tasks. Regardless of your procurement is in-house or outsourced, if you or your provider rely on an outdated and/ or a manual (semi-manual) procurement process, it’s highly likely that you are no longer able to sufficiently and efficiently support the modern-day businesses needs.
CFO’s and CEO’s now have greater digitization awareness, so procurement leaders need to educate themselves on advancements available to improve procurement efficiencies, reduce risk and reliance on manual work practices and look to add additional value – to procurement and beyond.
Are you one of the 75% of businesses that still rely on manual or semi-manual processes for your Energy Procurement?
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*Source: 2019 PASA Procurement Transformation Report