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Procurement Orchestration 101: A Guide for Procurement Leaders

Procurement Orchestration 101: A Guide for Procurement Leaders

Imagine a procurement intake process plagued by long cycle times, opaque approval processes, and  rampant rogue spend. This is why so many stakeholders avoid or ignore the formal procurement process: because it often creates more headaches than solutions. Procurement orchestration offers a solution to all of those problems by enabling an easily adoptable procurement process across all of your currently installed systems. 

Procurement Orchestration Definition

Procurement orchestration is the process of centralizing all purchase intake requests and coordinating needed cross-functional approvals to create a purchase requisition.  Increasingly, businesses are applying intake-to-procure solutions to enable procurement orchestration layers, by creating a single front door for intake that spans current procurement systems. 

Procurement orchestration encompasses tools and strategies that help maximize spend visibility and augment efficiency of procurement teams. Think of it like a powerful spotlight guiding the way in a dark room, as opposed to traditional methods, in which team members wander around on their own by candlelight. 

Another way to think about procurement orchestration providers is like a collaboration layer for your procurement tech stack. You may already be using ERP functionality, a procure-to-pay (P2P) system, or even best-of-breed solutions for contract lifecycle management (CLM) or supplier information management (SIM). Intake-to-procure solutions unify this IT landscape, creating a procurement start button for stakeholders to make any request — a new purchase, a new contract, onboard a new vendor, or even an independent contractor. 

Because procurement orchestration adds a layer of collaboration, it provides a step change improvement over fragmented, manual processes offered by many older solutions. To learn more about this trend is changing procurement and supply chain management, check out our recent webinar, “Forecasting the Future: Executive Predictions for 2023.”

Procurement by the Numbers: A Case for Procurement Orchestration

The key reason businesses are looking at procurement orchestration is to add a collaboration layer for their procurement processes that increases stakeholder adoption. 

How do procurement orchestration layers accomplish this? Consider the numbers, which paint a picture of painfully slow, stop-and-start processes. 

According to Zip research, nearly half of over 1,000 businesses surveyed indicated they need six cross-functional approvals for new software or vendor purchases. 

Taking it a step further, 27% of respondents said they require more than 10 approvals. 

Meanwhile, 32% of finance and accounting professionals said it takes three weeks or longer to secure approval for new purchase requests. 

The question is, how do you manage these needs and streamline the intake and approvals processes? That is where modern procurement orchestration diverges from traditional methods. 

Problems Procurement Orchestration Solves

If you’ve already adopted one or more common procurement solutions, you might have experienced one of these problems in your procurement team:

  • Too many systems and fragmented processes
  • No central repository of procurement data
  • Fragmented procurement workflows, leading to maverick spend

As is often the case with many line of business employees, new procurement policies and processes are often met with resistance. From a behavioral science perspective, even when traditional methods prove to be unwieldy and ineffective, teams can often be resistant to change, from the CPO on down.

Key Components of Procurement Orchestration

When executed properly, how does procurement orchestration make for a healthier intake and approval process?

The components of procurement orchestration include:

  • Automated workflows and processes. From the moment of purchase initiation, every manual touchpoint slows down intake and approval processes. Recall the aforementioned survey data: 27% of survey respondents said they require 10 or more approvals. It’s easy to see how a fragmented, manual process can quickly become a significant drain on efficiency. Automated workflows and processes streamline processes that can lack definition. Integration with existing systems and technologies (e.g., ERP, procure to pay). Technological inertia is real (and not just limited to the procurement function). Procurement orchestration can overcome this by integrating seamlessly with existing systems. A procurement orchestration layer works as an embedded platform on top of existing systems, rather than in conflict with them. 
  • Process reporting and analytics. More data and metrics allows you to identify bottlenecks and streamline the intake process. Increased visibility also allows procurement teams to control rogue spend. 
  • Single front door for intake process. Speaking of intake, procurement orchestration allows you to manage the intake process by using one “door.” One door makes for a simplified user experience that lends itself toward self-service. Users won’t have to use up valuable time with manual questions for help by email, messaging, etc., particularly in the pandemic era of increased remote work. 

Benefits of Procurement Orchestration

Working with procurement orchestration providers introduces several efficiencies to yield an optimal intake process. 

Those benefits include: 

  • Improvement in relevant KPIs, like cycle times and procurement NPS. Remember the aforementioned survey results? With a procurement orchestration layer to streamline the procurement process, approval wait times no longer need to reach three weeks. 
  • By streamlining the process, you also overcome technological inertia among your employees. Reduced disruptions encourage employee buy-in, yielding an even more effective procurement orchestration process. 
  • With automated processes and more data, real-time decision-making can occur by the numbers and established processes. That way, rather than a hard-to-track patchwork of decisions made by potentially 10 or more stakeholders, procurement intake can flow from one central source of data. Time saved and rogue spend mitigated translates to cost savings for your business. 

What are Challenges Associated with Implementing Procurement Orchestration?

To be sure, there can be challenges associated with introducing a procurement orchestration layer to your intake-to-procure processes. 

Legacy tools, like P2Ps and ERPs, can make implementing procurement orchestration more difficult. Some tools may use custom fields that are more challenging to integrate effectively. Others may not play well with procurement orchestration layers that offer competing functionality.  

In addition, resistance to change among some procurement teams can be a challenging factor, as stakeholders can initial view procurement orchestration layers as yet another solution. 

Procurement Orchestration Best Practices

How do you get the most out of procurement orchestration? Like any tool, you will need to know how to best use it. 

Procurement orchestration best practices include: 

  • Developing a procurement policy aligned with business goals 
  • Creating a central repository of procurement data
  • Establishing clear workflows and rules
  • Monitoring and measuring performance in real-time
  • Encouraging collaboration between internal stakeholders and key approvers (e.g., legal, security)

Future Trends in Sourcing and Procurement Orchestration

Procurement is always evolving. As we look to the future, here are some potential trends that will impact the space: 

  • In a recent survey, 42% of CPOs said supplier relationships will be one of their main focuses. Simply put, even with the rise of automation in mind, personal relationships will remain key. 
  • With that said, the digital transformation rate in procurement is expected to reach 75% by 2025. 
  • The rise and staying power of remote work will continue to yield both benefits and drawbacks for procurement teams. With hybrid and remote work likely to remain in vogue for the time being, businesses will continue to move to adoption of cloud-based procurement solutions. 
  • Amid economic headwinds, businesses are fighting for efficiencies. Per the aforementioned survey data, 62.6% of finance leaders say increasing efficiency and team productivity is a top priority for the coming year. Furthermore, almost half indicated they are looking to reduce operating expenses by more than 20% in 2023. 

How Companies Implement Procurement Orchestration with Zip 

Zip’s category-defining intake-to-procure platform makes adopting procurement processes easy for all stakeholders. 

With Zip Intake, users can harness the power of automation and data to direct them to the appropriate stakeholders. Furthermore, Zip requires no training, providing a consumer-grade user experience for any employee to initiate or approve requests. Zip Intake creates purchase requests and purchase orders at the right time, too. 

Zip Approvals streamlines the approval process, automatically looping in the appropriate stakeholders at the right time for each purchase request. You can even parallel-track vendor approvals when it’s logical to do so. 

Sign up to demo Zip and see it in action for yourself.

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Margin Makers is a newsletter for anyone responsible for spending at work. We curate practical guides and original ideas for finance and procurement teams to help them do their jobs better.
Nick Heinzmann
Head of Research at Zip

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