Finally, motivation within the purchasing department is strongly influenced by efficiency. If the purchasing process is slow, failures occur and process costs are high the satisfaction of the internal customers will decrease. Their complaints and criticism lead to a steady erosion of the motivation of the purchasers. The subsequent losses of efficiency can spiral down into a vicious circle which will be very difficult to break out of.

So purchasing efficiency is more than just an instrument to save money. It is a core capability which helps the company to realize competitive advantages. The sentence: „Make more with less“ can be heard more frequently today than ever before, and an effective procedure for the realization of efficiency increases is becoming especially important. But in most purchasing organizations the „low-hanging fruits“ have already been harvested, so a significant rise in efficiency can be achieved only by means of strategically designed middle-term and long-term measures.

A „shared service center“ – the silver bullet?

When the term „shared service center“ – SSC for short – is heard, alarm bells still start ringing for many people. Memories of outsourcing projects – frequently ending in failure – and questions about „make or buy strategies“ suddenly pop up. However, there is a decisive difference between SSC and outsourcing: the interface between the actively involved people remains within the company in the case of SSC, and this has massive repercussions – and positive ones at that – for the implementation process. Demands made on the maturity of the organization and the processes are by no means as high as those caused by a complete outsourcing. Although the establishment of a SSC does not automatically solve most internal problems, it can become the silver bullet against inefficiencies in the company when careful preparation has been made.

There is a fundamental question which must be asked: „What should the SSC be able to do, and what should not be a part of it?“ The scope of the services must be clearly defined as one of the essential pillars to achieve sustained acceptance and success of the new unit. Our project experience shows that the creation of a SSC in purchasing is the most promising for the operational division. The operational procurement division – in comparison to strategic sourcing – is sharply characterized by repetitive activities and tasks which lend themselves well to system support. We have also seen that the bundling of the activities, many of them dispersed over many sites, brings with it a substantial step forward in efficiency through harmonization. During one of our current projects, we have determined that identical processes have frequently taken on properties specific to the location although there is no real reason for this. Let us take a look at the operational construction purchasing for a global player as an example. At Site A, the orders were always placed with a general contractor as „turnkey project“, while at Site B the contracts were awarded to a syndicate with a number of different contract partners, although in both cases the key specifications were the same. Concretely speaking, the operational order handling process (procure to pay), the operational management of the interface to the supplier, or the master data management are especially suitable for the core services of a SSC called „Operational Procurement“. During the preparation of the concept, special attention should be paid above all to these core services because the success of the transformation and the success attributed to the people in charge of the project will later be measured on the basis of these services.