How This Australian Mining Contractor Scaled Procurement Volume by 40% With Procurify

The Challenge

Time to Change

In 2017, Pindari signed a major facility maintenance contract with a blue chip mining company. The contract calls for Pindari to provide ongoing cleaning and landscaping services across eight active mining sites, spanning an area roughly the size of Belgium.

The project was an important milestone for the company. While Pindari already had a track record in providing top-notch mining support services, the sheer scope and complexity of this project took their operations to a whole new level.

“This contract was a real coming of age moment for us,” says Pamela Leek, Pindari’s Finance Manager. “We were very comfortable in our previous operations but given the sheer logistical complexity of this contract, it became clear that we needed a more professionalised management structure and procurement process.”

Apart from the size of the contract, several other elements made it especially taxing on Pindari’s existing processes.

Most of Pindari’s previous construction and contractor services had been quoted on a project basis allowing for in-house services to be priced and the opportunity given to external contractors to submit pricing before proceeding with the clients quote. In contrast, facilities management is an ongoing service that requires greater monitoring of costs as there are more parties involved in the transaction and each transaction can be more complex. Cleaning also involves a very large number of small purchases, such as uniforms, cleaning supplies, gloves and other low-cost items. As a result, since taking on the contract, Pindari’s overall procurement volume has increased by 40%.

‍These challenges are magnified by the distance between Pindari’s head office in Dunsborough and their sites in the Pilbara.

“To get from the head office to site, you’d have to drive three hours to Perth, then take a two-hour plane ride to the site itself,” explains Pam. “So as you can imagine, that makes it very hard to track shipments and verify purchases.”

Original Process

Before Procurify, Pindari had a completely manual procurement system consisting of various Excel forms and registers.

The process was as follows:

1. Staff at the work site fill out an Excel template requesting a purchase, and email the template to the procurement team.
2. The purchase is filtered into one of three buckets:
   a. If the purchase is under $1000, the procurement team can approve it directly.
   b. If the purchase is over $1000 but under $50,000, it is sent to the division manager for approval.
   c. If the purchase is over $50,000, it is sent to the Finance Manager for approval.
3. Once approved, the procurement team creates a purchase order and sends it to the supplier.
4. The purchase is recorded into the appropriate Excel register.
5. When the items are received, the shipment is also logged in the register.
6. Payment is made to the vendor.
   

This process was very labor-intensive, and often resulted in miscommunication or human error.  It was also near-impossible to consistently verify the quality of the purchases, due to the distance from the work sites.

Searching for a Solution

With the new contract, Pindari realised that the time had come for a bold evolution of its procurement processes. Specifically, they had a few key goals:

• Centralise and simplify the entire procurement process.
• Bring all communication onto one platform to facilitate coordination between office and site.
• Implement a procurement process that incorporates proactive controls. Have a customised requisition, approval and receiving process.
• Ensure all budget owners have appropriate data to manage budgets autonomously at <$1k, <$50k and >$50k level.
• Implement a system that allows for tracking and a clear audit trail.
• Improve transparency for the finance team and provide context for all invoices.
  

Given how critical this decision was to the future of the company, Pindari invested a lot of time researching potential solutions. Eventually, they chose Procurify, for three main reasons:

Low Technical Overhead

Since Pindari did not have an in-house IT team, they were not interested in solutions that would have to be hosted on-premise, or that would require significant ongoing maintenance and technical expertise. Instead, they wanted a cloud-based solution with excellent support and low technical overhead.

In this regard, Procurify was head and shoulders above the rest – especially when it came to the implementation process.

ERP Integration

As part of their operational evolution, Pindari had upgraded to a robust ERP system – MYOB Advanced. It was essential for their procurement system to integrate well with MYOB, and Procurify passed with flying colors. 

“Procurify has great export functionality, so it was very easy to get the reports we needed. Then we just gave them to MYOB and all they had to do was match up the columns to their fields.”

Codified Best Practices

From the start, Pindari was committed to implementing a new procurement process. Rather than demanding that a solution fit their existing way of doing things, they were specifically looking for one that would enforce procurement best practices throughout the company.

“We found that a lot of the alternative solutions were too customisable,” shares Pam. “We believed that since procurement is a process that every business undertakes, there should be a solution out there that could tell us the best way to do things. And Procurify was that solution.”

Results

Procurify has completely transformed Pindari’s end-to-end procurement process. Major benefits include:

Improved Cost Management

Before Procurify, Pindari did not have a repeatable process for verifying shipment quality. Since the shipments were sent directly to the mine site, the procurement team was dependent on the end users for feedback on the shipments. 

Rigorous checks were rarely performed, resulting in only the occasional faulty shipment being identified and returned. In fact, the company didn’t even realise how common this was until they started using Procurify. Thanks to Procurify’s automated 3-way match process, Pindari can conduct all communications through a single channel, and end-users can pass or fail a shipment with a single click. This has greatly improved adherence to procurement policies throughout the organisation.

According to Pam, this has allowed Pindari to reduce overpayment and strengthen  its overall vendor management practices:

“If a particular vendor is constantly letting us down by sending us the wrong quantity of an item, we can have a conversation with them, with the records to back us up."

Reduced Key Person Risk

Procurify has enabled Pindari to systematise its procurement processes, greatly reducing its dependence on key individuals within the purchasing function.

“Before Procurify, we were mainly able to stay on top of things because we have such excellent staff here who know what they’re doing,” explains Pam. “But you get a nervous feeling whenever one of them takes leave, because nobody else can do the job as well as they can, so you worry what’s going to get missed.”

Ironically, this key person risk was one of Pindari’s main reservations about implementing a structured procurement solution in the first place. People were worried that it would make the procurement process too rigid, as the system would not allow a purchase to go through if key personnel were away.

As it turns out, Procurify has made approvals more agile and adaptive, not less. Since the procurement process is now systematic and rules-based, urgent purchases can be referred to other approving authorities if the primary approver is not available. Consequently, purchases have become less subject to delays than before.

Clear Audit Trail

Procurify offers a single source of truth for Pindari’s entire procurement process. Not only is this helpful for internal accountability, but it also establishes a clear audit trail that inspires confidence in prospective and existing customers.

“In all of the tenders that we go through, we talk about how we create value for money, and part of that is showing how our procurement processes are accountable, transparent and based on solid technology,” says Pam.

Having a comprehensive, time-stamped master record of all procurement activity allows Pindari to demonstrate their accountability to customers, while minimizing the likelihood of future disputes and potential liability with suppliers at the same time.