Procurement Compliance
From Adam and Eve sharing an apple to Orpheus turning around for a final, fateful glance of
Eurydice, human narrative is full of bad things happening to people who break the rules. Cautionary
tales aside, following the rules and sticking to established protocol still may not be a guaranteed
ticket to success—but it certainly helps tip the odds in one’s favour. Meeting regulatory
requirements, along with internal and external expectations based on well-developed procedure, is a
key component of procurement compliance in particular, as well as effective procurement in
general.
Every company is different, and those which operate within more restrictive legal parameters may
have a more robust and complex approach to compliance than others who don’t buy or sell heavily
regulated materials or offer heavily regulated goods or services. Organisations track compliance in a
variety of ways, depending on their specific needs and ambitions. But however you measure it,
chances are your procurement department can benefit from a deeper understanding of compliance,
and its importance in supporting the overall success of your organisation.
Procurement Compliance Defined
In most contexts, compliance is simply meeting pre-established expectations. For procurement
teams, bringing together the compliance function with the procurement function means treating the
https://www.purchasecontrol.com/uk/blog/procurement-compliance/
1/5
latter as the executor of the former. More simply, compliance sets the standards to be met, and the
procurement process helps support meeting those standards through cost savings, supplier
management, contract compliance, risk management, and internal use of technology, policy, and
procedures.
In supporting compliance considerations, procurement leaders help support business strategies,
improve competitiveness, and add lasting value to build a strong bottom line through improved
internal controls, better financial recording and reporting, smart supply chain management, and
identifying and exploiting opportunities for process improvement and relationship building.
“In most contexts, compliance is simply meeting pre-established expectations. For
procurement teams, bringing together the compliance function with the procurement
function means treating the latter as the executor of the former.”
Benefits of Effective Procurement Compliance
The role of compliance within your company can be as simple as ensuring your staff follows
established procedures for ordering and approvals to complex as suppliers meeting federal, state,
and local purchasing regulations regarding the raw materials you use to produce the goods you sell.
Whatever your industry or goals, bringing together compliance and procurement can benefit your
company in a number of ways.
Technology-Driven Procurement
Effective and comprehensive compliance to both external and internal expectations begins with
smart, streamlined internal controls and best practices. Choosing a centralised and comprehensive
procurement software solution improves compliance management through digital transformation
via:
Transparent Data Management and Analysis. Capturing every scrap of information related
to all of your company’s transactions greatly simplifies the procure-to-pay (P2P) process. But
with a connected, centralised document repository and accessibility (including mobile devices)
for key stakeholders at all levels, management and staff can collect, analyse, and transform
data to create rock-solid audit trails, accurate financial reports and forecasts, and even
identify areas within the procurement function where compliance isn’t quite up to snuff.
Your compliance function, working with your legal team, can also use the software to create
templates for contracts and other documents designed with legal and financial compliance in
mind. The time and work-hours saved, combined with the speed and simplicity offered by
automated approvals and payments, can quickly create a significant bottom-line boost. Risk
https://www.purchasecontrol.com/uk/blog/procurement-compliance/
2/5
management also gets a boost here, since your exposure to legal and financial reporting
problems is greatly reduced.
Automation Empowering Spend, Supplier, and Contract Compliance Building better
practices doesn’t do much good if they’re hard to implement, easy to circumvent, or impossible
to track. A dedicated software solution lets you build internal controls for every step of the
procurement process, from purchase orders to payments, and provide clear, easily accessible
tracking for authorisations. With your supply chain connected to your document library, it’s
easy to offer approved team members intuitive and user-friendly catalogues for purchases
from only preferred suppliers that meet legal, financial, and internal requirements.
Accountability and access are both improved, as is procurement’s ability to connect with other
departments in support of broader cost-saving, value-building initiatives.
This kind of control is often referred to as spend compliance. Reining in rogue spending
supports both better compliance and continuous improvement. For example, spend compliance
can also touch on purchases that need to be brought into the procurement workflow, or new
materials, goods, or services added to your company’s supply chain and in need of integration
with your compliance controls as you pursue emerging markets.
Supplier compliance can be applied in two ways; used internally, it can refer to the policy of
using only preferred suppliers as part of spend compliance initiatives for your company. On
the other side of the coin, it refers to how you track and evaluate vendor performance and
compliance with your own policies and contract terms (a.k.a. contract compliance), as well as
the legal requirements established by government agencies.
Supplier management also involves risk management. Metrics such as sustainability,
operational support levels, and Service-Level-Agreements (SLAs) detailing quality, safety, data
security, and customer service are all important parts of measuring both supplier and contract
compliance. With AI-assisted automation and centralised documentation in addition to vendor
evaluation, you’ll have complete visibility to what’s working, what isn’t, and areas where you
may be exposed to undue risk through a supplier’s noncompliance.
Maximising Procurement ROI
While a procurement software solution can certainly improve compliance across the board for your
organisation and supply chain, it’s also an effective tool for evaluating your procurement function
itself.
How well does your procurement department meet the goals and best practices it establishes for
your organisation? Is it hitting benchmarks for process improvement and value creation? How well
does it meet standards for on-time payments?
What percentage of total spend is devoted to procurement? How much of your spend is through
compliant, managed contracts? Can those numbers be further optimised through strategic initiatives
and supplier partnerships?
How well does procurement obtain buy-in for cost reduction, process improvement, and compliance
https://www.purchasecontrol.com/uk/blog/procurement-compliance/
3/5
initiatives across your organisation as a whole?
Asking these questions—in effect, evaluating the evaluator—will yield rich insights and guide you
toward a procurement function that can lead by example while continuing to identify new
opportunities for greater compliance, savings, and relationship building.
Cut Costs and Create Value with Compliance
At first blush, dealing with procurement compliance might have you feeling like you want to toss the
rule book out the window—and take a leap after it. But if you take the time to identify the metrics
you need to measure, take advantage of the technology and tools that simplify and streamline the
process, and ensure your procurement department complies with its own standards and practices,
you can master compliance and turn your procurement department into a dynamo of savings,
continuous improvement, and value.
Make Compliance a Natural Part of Your Workflow With PurchaseControl
Find Out How
https://www.purchasecontrol.com/uk/blog/procurement-compliance/
4/5
AboutPur
chaseCont
rol
Pur
chaseCont
roli
scl
oudbasedpr
ocur
ementsof
twar
eforbusi
ness
spendmanagement
.Weempowerbusi
nessesbypr
ovi
dinggr
eat
er
t
ranspar
encyandover
sighti
ntot
hepur
chasi
ngpr
ocess.Wi
th
Pur
chaseCont
rol
,youhavet
hef
lexi
bil
it
ytomanagehow spendact
ual
ly
happensi
nst
eadofhow youwi
shi
twoul
dhappen.
Theent
ir
ePur
chaseCont
rolt
eam hasexper
iencewi
thi
nar
ange
ofbusi
nesses,andassuch,webr
ingapr
act
ical
,hol
ist
icappr
oach
t
opur
chasi
ng.Weunder
standwhati
ttakest
orunabusi
nessandappl
y
t
hatknowl
edget
omakePur
chaseCont
rolasef
fect
iveaspossi
blef
oral
l
user
s.
Lear eatwww.
nmor pur
chasecont
rol
.com
Cont
act
s
EU Of
fi
ceI
nfor
mat
ion
UK:+448455912724
I
rel
and:+35315134623
enqui
ry@pur
chasecont
rol
.com
USOf
fi
ceI
nfor
mat
ion
US:8007375605
i
nqui
ry@pur
chasecont
rol
.com
ConnectWi
thUs
Facebook:ht
tps:
//www.
facebook.
com/
Pur
chaseCont
rol
/
Twi
tt
er:ht
tps:
//t
wit
ter
.com/
pur
chasecont
rol
/
Li
nkedI
n:ht
tps:
//www.
li
nkedi
n.com/
company/
pur
chasecont
ol/
https://www.purchasecontrol.com/uk/blog/procurement-compliance/
5/5
