Many CPOs are stuck with low contract compliance on indirect spend – a situation that dries equally low automation rates and poor levels of organizational productivity. This doesn’t have to be the case. Using the power of indirect procurement transformation, it is possible to positively impact business growth.
One example of this is our recent success with the bioinnovation company Novozymes. With 48% of the market share, Novozymes is the global leader in industrial enzymes and microorganisms, the secret ingredient behind everything from detergents through biofuels to agriculture.
Just as enzymes are catalysts that increase the rate of chemical reactions, Novozymes needed its own catalyst to clean up its procurement. Low awareness of purchasing policies and lack of focus on indirect spend meant that more than 60% was going to non-preferred suppliers, and there were 3,000 new suppliers added each year. After streamlining existing policies and looking towards automation and technology to continue their transformation, Novozymes found its catalyst in IBX Purchase-to-Pay.
Its goals were efficient and automated handling of orders and invoices, a greater percentage of spend on existing contracts with fewer new suppliers introduced, and transparency on committed costs.
IBX Purchase-to-Pay, a Cloud-based e-procurement solution, integrated with Novozymes’ internal systems and made available more services and products. Users are now quickly guided to what they need.
On the back end, invoice processing was streamlined with e-invoices and automatic pre-matching. Higher usage (PO rate) meant that errors were eliminated upstream, and there was an increase in on-time payment.
As a result, contract compliance of indirect spend has increased by 20 points (from 42% to 62%) and more than 90% of all purchase orders are automated and require no touch.
The Novozymes case study shows us the real impact of indirect procurement transformation on the entire organization. By recognizing the strategic importance of efficient indirect procurement, it was able to quicken the ROI of its investments.
Novozymes, like every company, is unique. But the benefits it has gained from transformation are far from unique. We have seen IBX solutions bring similarly inspirational results to companies of very different profiles, such as Deutsche Post DHL, and Trondheim in the public sector.
Whether you are a global postal and logistics giant or a municipality in Norway, IBX solutions can transform your procurement process.