Everything You Need to Know About Procurement Orchestration

As a procurement leader, you may feel you have to choose between a scalable process and flexible customization.

Because when you have a growing team managing procurement across dozens of business units, customization means that every unit is using different processes, different systems, and different suppliers. 

None of this is conducive to scaling.

On the other hand, introducing too many standardized processes can handcuff your business units and make procurement feel completely unresponsive to their needs.

Procurement orchestration helps you balance both.

In this guide, we'll introduce the basics of procurement orchestration, explain why it's necessary in the new world of complex enterprise procurement, and show you how to introduce it into your procurement operations.

What is procurement orchestration?

Procurement orchestration is the centralized coordination of procurement processes, technology, and resources across multiple business units, regions, and categories. It allows enterprise procurement teams to strategically manage spend, suppliers, and contracts at scale while still allowing customization to accommodate stakeholder-specific requirements.

They're also used as the main facilitator between procurement and business units to align on requirements, customize processes where needed, and collaborate on procurement initiatives.

Procurement orchestration creates a better business stakeholder experience because all the procurement resources they need are coordinated through one central point of contact—they don't have to navigate a complex web of procurement processes and systems on their own.

Ultimately, it makes it much more convenient to manage procurement complexity across the enterprise.

Why you should use procurement orchestration

Procurement orchestration is a necessary adaptation to how enterprises need their procurement function to operate. It improves complex purchasing processes by integrating systems and stakeholders into a cohesive workflow.

Here's why procurement orchestration is a must-have in your organization.

1. Procurement has become more complex, so operating models must adapt

Procurement teams used to be focused on basic sourcing and cost savings. Now they're expected to drive strategic value. 

Procurement orchestration makes this possible.

Traditionally, procurement operated in a decentralized model, with each business unit managing its own processes and spending independently. Because the enterprise wasn't as complex, this siloed approach was manageable.

But now, enterprises have grown tremendously complex.

Procurement is now at the center of an incredibly complex web of stakeholders, so decentralized models simply can't keep up—especially as procurement is increasingly expected to deliver more strategic value beyond cost savings.

However, with many enterprises now viewing procurement as a strategic advisor rather than a back-office function, complexity can't be an excuse for procurement not delivering strategic value.

Therefore, procurement operating models must adapt, with their role shifting from decentralized tactical buyer to centralized strategic orchestrator. 

The procurement team can simplify things for stakeholders by acting as a centralized resource and tailoring procurement processes, technology, and category strategies to align with unique business unit needs.

2. Procurement technology landscapes have exploded

With more strategic demands and global complexity (accelerated by COVID), the market has exploded with new procurement software across areas like spend analytics, supplier risk, contract management, and procure-to-pay.

These solutions are often implemented at the business unit or regional level to solve niche problems, but they end up creating a fragmented technology landscape.

And once the procurement tech stack becomes an uncoordinated mess of disparate systems, it's incredibly difficult to drive adoption, maintain data integrity, and generate enterprise-wide insights.

Because procurement orchestration centralizes the management of technology, you can make it much simpler to rationalize your tech stack by coordinating the integration of these disparate systems into one unified architecture.

3. Procurement needs to personalize its services at scale

Limited procurement-stakeholder interaction also means procurement teams have less insight into the unique needs of each business unit.

Procurement teams have to work as much customization as possible into their offerings while still maintaining standardization and compliance. But customizing procurement processes is typically time-consuming.

By using procurement orchestration, you're pulling a magic trick by achieving personalization at scale.  You can start with standard enterprise-wide procurement policies and processes, but then customize certain elements like approval workflows or category strategies to align with the business unit's specific goals.

For example, if a business unit is pursuing an aggressive growth strategy, you can provide more hands-on category management support. Or if a business unit is going through a major transformation, you can customize procure-to-pay workflows to better enable the change.

4. Procurement orchestration benefits the entire organization

The benefits of procurement orchestration reach far beyond the procurement team.

Orchestration helps business units by giving them a single point of contact within procurement that deeply understands their needs. No more navigating a mess of procurement systems and processes to get support.

They also help finance by improving spend visibility and compliance. With procurement acting as a centralized strategic partner to the business, finance can have greater confidence in savings targets and risk management.

With standardized supplier onboarding, contracting, and performance management coordinated through the procurement hub, suppliers have a much simpler experience working with the enterprise. 

Next, let's look at how you can put procurement orchestration into practice.

Procurement Orchestration Best Practices

Introducing a new procurement operating model can feel like a daunting project, but procurement orchestration is surprisingly simple when supported by the right expertise, processes, and technology.

And because the orchestrated model simplifies procurement for stakeholders, it's not nearly as hard to drive adoption compared to forcing compliance with rigid procurement policies.

Here are some best practices for smoothly introducing orchestration in your procurement organization:

Setting up your procurement orchestration model

What orchestration looks like depends on your organizational structure, stakeholder needs, and enterprise goals, but generally you need a few key elements:

• Centralized procurement leadership: Establish a center-led procurement organization, with a Chief Procurement Officer overseeing the central team that designs and governs enterprise procurement strategy.

• Business unit collaboration: Partner with business units to understand their unique needs and identify opportunities for customization within the standardized procurement framework. Design service-level agreements to formalize the support procurement will provide.

• Category management: Organize your procurement resources by category, each with a designated category manager responsible for developing deep expertise and driving enterprise-wide category strategies. 

• Procurement technology: Implement a unified source-to-pay suite that allows a balance of standardization and flexibility. Integrate best-of-breed solutions for niche requirements rather than letting them proliferate on their own.

• Policies and processes: Design a centralized procurement policy that allows some customization for business unit needs. Standardize core processes like supplier onboarding and procure-to-pay while allowing flexibility where appropriate.

‍

Implementing procurement orchestration with your stakeholders

How you partner with stakeholders is critical for procurement orchestration success. 

Here are some key practices:

• Engage stakeholders early: Partner with business unit leaders in the early stages of designing your orchestration model. Understand their goals, speak their language, and shape your approach around their needs.

PRO Tip: Spendflo ensures that all stakeholders remain in the loop throughout the procurement process. With clear approval workflows and seamless integration with Slack, you can bid farewell to endless email threads. 

‍

Try Spendflo Now!

‍

• Establish procurement ambassadors: Identify the procurement point person within each business unit and empower them to drive adoption of your orchestrated procurement model within their teams.

• Start with a pilot: Begin orchestration with one or two business units to work out the kinks. Learn from their feedback and demonstrate quick wins before scaling to the rest of the organization.  

• Ensure two-way communication: Establish clear channels for business units to request procurement support and provide feedback. Use surveys, interviews, and stakeholder meetings to continuously gather input.

Adopting this stakeholder-centric mindset is key for ensuring procurement orchestration drives real value for the business rather than just being procurement for procurement's sake.

Elevating your procurement organization with orchestration

It's time for procurement to rise to the challenge of becoming a strategic enabler for the business. But this requires letting go of the old decentralized ways in favor of a new orchestrated model.

By establishing procurement as the strategic orchestrator of all procurement activity across the enterprise, you can tame the complexity of modern procurement while still providing a customized experience for stakeholders.

This empowers procurement to drive the next level of strategic value - whether that's capturing more innovation from the supply base, enabling enterprise-wide risk management, or driving progress toward sustainability goals. 

The journey requires close partnership with stakeholders, bringing together the right expertise, processes, and technology to make it happen - but it's more than worth it to elevate the procurement function and scale its impact.

Challenges of Procurement Orchestration

The key challenges of procurement orchestration include change management to overcome stakeholder resistance, striking the right balance between standardization and flexibility, and measuring and communicating the value of the orchestrated model to secure ongoing support.

1. Change management

One of the biggest challenges of implementing procurement orchestration is overcoming resistance to change from stakeholders across the organization. Many business units are used to managing their own procurement processes independently, and may be hesitant to give up control to a centralized procurement function.

There are several reasons for this resistance.

• Business units may feel that a centralized approach will slow them down or not be responsive enough to their unique needs. 
• They may have long-standing relationships with certain suppliers that they don't want to disrupt. 
• Or they may simply be set in their ways and resistant to new processes and technologies.

To overcome this resistance, procurement teams should engage with business unit leaders early in the process to get their input and buy-in. By involving stakeholders in the design of the orchestrated model, procurement can ensure it meets their needs and secure their support for the transition.

2. Balancing standardization and flexibility

Another major challenge of procurement orchestration is striking the right balance between standardization and flexibility. 

• On one hand, standardizing procurement processes across the enterprise is essential for achieving the benefits of orchestration, such as economies of scale, improved compliance, and better data visibility. 
• But on the other hand, too much standardization can make procurement feel rigid and unresponsive to the unique needs of individual business units.

The key is to find the right level of standardization that allows for efficiency and control while still providing room for customization where needed. This requires a deep understanding of each business unit's specific requirements and pain points.

3. Measuring metrics

A third major challenge of procurement orchestration is measuring and demonstrating the value it delivers to the organization. 

This can make it hard to justify the investment in orchestration and maintain ongoing support from executive leadership and other stakeholders. 

If procurement can't show tangible results, the orchestrated model may be seen as just another bureaucratic layer rather than a strategic enabler.

‍

Some key metrics to track might include:

- Cost savings achieved through leveraged buying and standardized processes

- Percentage of spend under management and compliance with procurement policies 

- Cycle times for key procurement processes like purchase-to-pay and supplier onboarding

- Stakeholder satisfaction scores and adoption rates for procurement tools and services

- Number of supplier innovations or process improvements generated through orchestrated supplier management

Procurement teams should establish baselines for these metrics prior to implementing orchestration, and then track progress over time to show the impact of their efforts. Regular reporting to senior leadership and other stakeholders is critical for maintaining visibility and support.

‍

How Spendflo helps you centralize visibility, streamline intake and manage your procurements with ease

We know procurement orchestration can feel like herding cats, so we at Spendflo have built a platform that makes it way easier. We consolidate data from all your disparate procurement systems and processes into one unified view, so you can easily monitor compliance, track savings, and identify opportunities.

• Customizable intake forms and automated workflows route requests to the right approvers
• Built-in compliance controls enforce your procurement policies while allowing pre-approved exceptions
• Real-time spend analytics and KPI dashboards track progress and prove orchestration ROI

Book A Demo With Spendflo Now!

‍

Frequently Asked Questions About Procurement Orchestration

1. What is predictive procurement orchestration? 

Predictive procurement orchestration uses data analytics to forecast and optimize procurement needs. It helps anticipate demand, identify potential issues, and make informed purchasing decisions.

2. What is KPI for procurement?

Key Performance Indicators (KPIs) for procurement measure the effectiveness of the procurement function. Some common procurement KPIs include cost savings, spend under management, and supplier performance.

3. What do you mean by Orchestration?

Orchestration in the context of procurement refers to the centralized coordination and management of all procurement-related activities across an organization. It involves aligning processes, systems, and stakeholders to work together efficiently and effectively towards achieving procurement objectives.

‍