How Procurement Automation Can Boost Efficiency In Procurement
It’s no secret that the benefits of procurement automation are well-documented. The reality is the number of solutions on the market can make finding the right one for your organization a bit overwhelming. There isn’t a lot of information available about how to objectively assess the benefits of a procurement software solution based on industry best practices.
One benefit that is rarely discussed is the empowerment of your procurement team. The procurement department is constantly walking a fine line between making smart purchases for an organization and maintaining supplier relationships. A clear strategy is necessary to ensure that all parties are satisfied yet efficiency remains vital.
Workflow automation boosts procurement efficiency and reduces timeframes while empowering your procurement staff. By increasing procurement autonomy, legal doesn’t have to get involved with trivial tasks, which saves them time too.
Benefits of Procurement Process Automation
Speeds the Approval Process
Purchase requests often get stuck in the approval process do to your hierarchical approver structure. Automating the purchase order process makes it faster to place orders and reduce the ordering cycle time. It removes redundant processes and enables procurement staff to get more done in a shorter amount of time. This reduces your overall staffing costs and frees up additional time for strategic sourcing and other value-added tasks.
Improves Spend Visibility
Automation helps improve and maintain high-quality data. With it, you’ll get an accurate description of past purchases, contracts, order history, and supplier quotes. Deploying a procurement automation system ensures you have a consolidated view of your actual expenses which makes it easier to make data-driven decisions for your new purchases. It also helps in cost reduction on a continuous basis because it helps identify the gaps. Ultimately, you achieve cost savings and streamline your spend management and spend analysis process.
Improves Supplier Relationships
For strong and long-term supplier relationships throughout the supply chain, it is crucial to have transparency and clear disclosure. With automation, it becomes easier for your buyers and suppliers to have real-time communication and track their order status. Using an automated and more responsive system, suppliers are able to respond to bids faster and buyers can assign the order to the best quote that’s available. The entire process remains visible to all parties to save time, ensure optimal cost and quick resolution of any grievances. This provides an effective evaluation of suppliers, cost savings, real-time bidding, and healthy supplier relationships.
Contract Management Made Simple
Undoubtedly, your organization works with multiple vendors. Most of the time, the terms and conditions across all the contracts remain the same. Using procurement automation, you can keep all of your contract in a central database that is easily accessible with a single click. It speeds up the onboarding process for new suppliers and makes sure that all the critical terms and conditions and guidelines remain consistent across all of your contracts.
Automation provides standard contract templates and reduces time and error in your contract management. Easy access to the contracts also makes it easier to ensure contract compliance.
Boosts Overall Productivity
By automating your entire procure-to-pay cycle, and keeping everything accessible within a few clicks, your procurement staff can get real-time updates about anything in the overall procurement cycle. With the automated system, all stakeholders have more time to focus on strategic work because the manual processes are no longer needed. They can easily access all required information without navigating through multiple systems and running into bottlenecks. It empowers decision-making and increases productivity for the procurement function. This increased efficiency provides better control of the overall procurement cycle as it eliminates time-consuming and error-ridden manual processes.
Processes to Automate
Automating the purchase requisition process ensures that purchase requests don’t get lost on death, or get held up when someone is out of the office for an extended. Of time. Automation cuts down the time it takes for requisitions to be approved and removes redundant steps in the process.
Recent surveys indicate that nearly half of organizations found they have inadequacies and their purchase order practices despite having a formal purchase order system in place. Automating this part of the process allows companies to automate the entire purchase order cycle to deliver improvements in process efficiency and productivity while cutting costs.
With a manual contract management process, all contracts are stored in the same filing cabinet or on the same hard drive. It is unstructured and disorganized. Finding contracts and keeping an eye on them can be Procurement automation organizes all contracts in a central database that can be accessed quickly. It ensures that all contracts stay accurate and consistent as well.
Without clear communication and transparency, vendor relationships are easily strained. Automation allows procurement teams to streamline their vendor selection and choose the best vendor available. Organizations will be able to quickly identify and resolve issues to form a better relationship with the vendor leading to long-term cost savings.
When it comes to manual invoice management, procurement teams have too often deal with poorly managed purchase orders, missing good receipts, maverick spending and submissions delays. They may also deal with complex spreadsheets and a lack of transparency in terms of the spend culture. Manually managing invoices usually means delayed payments and compliance issues which can upset vendors. Your organization costs itself money with high invoice processing costs, duplicate payments, paying for goods that were never received, and the potential to make late payments to vendors.
Invoice management can be set up to automatically approve invoices within a certain threshold that match the purchase order and goods receipt. Extended functionality can be added through Integrations with accounting and finance tools such as QuickBooks to further streamline the process.
In today’s day and age, there is no excuse for relying on manual procurement processes at any stage of the cycle. Even small organizations can benefit from an automated, standardized process.
Choosing the Best Procurement Automation Solution
Assessing the level of purchasing complexity a software solution can handle is crucial to choosing the right one. Take a look at your typical procurement automation workflow to see how well the program you’re considering using is able to be customized to meet it.
It’s also worth noting that if a pyramid software solution is too complex, it will be difficult to get staff members across the company to adopt it. This will lead to Rogue spending and a potential nightmare of paperwork if manual processes are still being used.
You want to find something that is complex and robust enough to handle your current workflows but still remains easy enough to use so that even those who are not very technologically savvy can still use it intuitively.
Which Purchasing Processes are Ideal for Automation?
Part of choosing the best e-procurement software for your company lies and knowing which of your purchasing processes are ideal for automation. Objectively assess what your software needs to be able to automate and what the benefits would be.
If, for instance, the legal department gets involved in the purchasing process on a regular basis, and automation solution that focuses on streamlining your supplier negotiations could save you time. At the same time, your procurement team can use pre-approved negotiation positions and avoid involving legal in every change thereby allowing a single software solution to streamline two workflows.
Once you have chosen a few potential options for the e-procurement software your company may be willing to use long-term, schedule demos with the service providers to see how the program works and how well it will meet your expectations and needs.
From there, you will be able to make the choice about which procurement automation solution you want to use within your company.