How to streamline the process of procurement in financial services and insurance industries
Summary
Financial services and insurance industries are generally tightly regulated and have to remain compliant with a host of standards. Understanding procurement in financial services and insurance industries in a way that is specific to each organisation will allow procurement leaders to streamline procurement processes and boost returns from procurement operations.
Several measures can be implemented within financial services and insurance organisations. The main steps for streamlining procurement in financial services and insurance businesses include embracing digital transformation, implementing supplier performance management, and emphasising regulatory compliance.
Procurement is a vital process in any organisation, but it is especially critical in the financial services and insurance industries.
In the financial services and insurance industries, procurement is a critical function that is often responsible for the acquisition of essential services, such as IT infrastructure, consulting services, and office supplies. These industries rely heavily on procurement to manage their supply chains, control costs, and maintain regulatory compliance.
However, the procurement process can be complex, time-consuming, and prone to errors — with numerous steps and stakeholders involved. Streamlining this process can lead to significant cost savings, increased efficiency, and better supplier relationships.
Read on as we explore some ways to streamline the procurement process in the financial services and insurance industries.
Understanding procurement in financial services and insurance industries
The procurement process in financial services and insurance industries involves several stages, including identifying the need for goods or services, selecting a supplier, negotiating terms, creating a purchase order, receiving goods or services, and paying the supplier.
This process can be lengthy and complicated, involving several stakeholders, such as procurement managers, finance teams, and suppliers. It is important to have a clear understanding of the process and its requirements before attempting to streamline it.
The highly regulated nature of both industries may also require strict compliance and comprehensive reporting in all aspects of procurement.
Streamlining procurement in financial services and insurance businesses: The steps to take
- Embracing digital transformation
Digital transformation is a key driver of efficiency and effectiveness in the procurement process. Adopting digital tools can automate many of the manual tasks involved in procurement, reducing the time and effort required by procurement teams. Some of the digital tools that can help streamline the procurement process include:
- E-procurement systems: An e-procurement system can help automate many of the procurement processes, including requisition, sourcing, and purchase order creation. It can also help manage supplier relationships, contracts, and invoices. E-procurement systems can save time and reduce the risk of errors by automating many of the manual tasks involved in procurement.
- Spend management tools: Spend management tools can help financial services and insurance companies track their expenses and identify areas where cost savings can be made. These tools can help identify duplicate payments, overpayments, and other areas where costs can be reduced.
- Supplier relationship management tools: Supplier relationship management tools can help companies manage their relationships with suppliers more effectively. These tools can help identify the best suppliers, negotiate better terms, and manage contracts and performance.
- Implementing supplier performance management
Implementing supplier performance management is another way to streamline the procurement process.
Supplier performance management involves tracking the performance of suppliers, identifying areas where improvements can be made, and working with suppliers to improve their performance.
By implementing supplier performance management, financial services and insurance companies can ensure that they are working with the best suppliers and that they are getting the best value for their money.
Supplier performance management can also help improve supplier relationships, reduce the risk of supplier-related disruptions, and increase the company’s purchasing power.
- Emphasising regulatory compliance
Regulatory compliance is a key requirement in the financial services and insurance industries. Companies in these industries must comply with various regulations, including anti-money laundering (AML), know-your-customer (KYC), and data privacy regulations.
Failure to comply with these regulations can result in severe penalties and damage to the company’s reputation and have an indirect impact on its bottom line.
To streamline the procurement process, companies in the financial services and insurance industries must ensure that they are working with suppliers who are also compliant with these regulations.
Companies must conduct due diligence on their suppliers to ensure that they meet regulatory compliance requirements.
This includes verifying that suppliers have appropriate policies and procedures in place to comply with regulations, and conducting periodic audits to ensure ongoing compliance.
Partner with a specialist in procurement consultancy to reduce risks and boost returns from streamlining procurement in financial services and insurance ventures
Financial services and insurance businesses can effectively mitigate procurement risks and gain a sustainable edge by streamlining the processes of their procurement functions.
Working with a specialist with a proven track record in procurement consulting to leverage their expert insights and specialised knowledge can help organisations in the financial services and insurance industries to accelerate the results from swifter and more successful procurement operations.
