Procurement automation is generally utilized to expedite the acquisition or purchase process by relieving employees from monotonous and time-intensive responsibilities. High-grade procurement automation software allows you to concentrate on business-critical pursuits like strategizing policies to maximize your ROI along with focusing on decision making. This automation is transforming the P2P process by intensifying its effectiveness and delivering supplementary value along with keeping the costs down.
Understanding Procurement Processes in a Business
The procurement or acquisition process is an indispensable constituent of every business, no matter its nature or size. This process consists of a sequence of actions that are executed by a business to purchase goods or obtain services imperative to accomplish all their set organizational goals and objectives.
Recognizing and operating with the most reliable vendors to procure goods or services at the most favorable rates and of excellent quality is the primary purpose of the acquisition department. The output of the procurement process holds a direct relationship with the cost-saving drives of the company.
An efficient procurement process concentrates beyond simply the acquisition of goods and services. Since handling all these processes manually was an extremely tiresome and time-taking task, numerous businesses shifted towards the automation of these procurement processes to focus better on other business operations along with reducing the implementation time and human errors to maximize their profits.
Role of Procurement Automation in Maximizing Your ROI
The advent of any global financial crisis usually has a huge impact on every business sector. It halts production and interrupts transportation links and supply chains of almost every organization across the globe. Every procurement team in an organization has to adapt to the new normal brought about by such a crisis.
However, organizations with an already resolute procurement automation process in place will be capable enough to sail through the challenging times more easily, and their profits see no impact in case of a global crisis.
Since most procurement processes are monotonous, they are perfect for automation. Supplier bids, spend analysis, contract management, along with real-time procuring and payment methods, can all be automated to deliver considerable advantages to organizations.
Mentioned below are some of the key advantages of procurement automation that can assist businesses in maximizing their ROI.
- Expedite Procurement by Eliminating Manual Errors
Emails, faxes, and spreadsheets have always been the key components of the procurement processes. Administering all this data manually can lead to variability in the outcomes and an unpredictable supply chain.
It can further provide a lot of room for data entry errors, missed deadlines, and improper communication with the suppliers and internal team. This reduced visibility in the supply chain management and the acquisition process can prove to be a major obstacle and can even cause a standstill in production.
By adopting procurement automation, you can easily eliminate all the possibilities of human errors along with expediting your procurement process to enhance business performance and visibility to maximize returns.
- Encourage Open Communication with Vendors
The advantages of operating with a good vendor cannot be overstated. Vendors are usually viewed as a significant business component as they can influence the operations of your entire business. However, the manual procurement processes makes it hard for businesses to remain on top due to a lack of communication.
In addition, working with different tools can reduce the visibility of vendors’ real-time performance and responsiveness to purchase order acceptance and documentation. Procurement automation software designed for the acquisition process draws transparent and constant interaction channels to the forefront while assisting in subduing glitches, overcoming missed payment deadlines, and better customer satisfaction.
- Holds a Central Repository for Procurement Contracts
Every business usually operates with multiple vendors for the acquisition of distinct goods and services. Most times, the terms and conditions continue to be the same while signing on a new vendor or renewing the contract with a previous vendor, and getting the same papers signed every time. This can pile up the paperwork, making it hard to manage.
With the assistance of procurement automation, all your procurement contracts can be stored in a central repository that can easily be accessed through a mere click. This automation further aids in the expeditious onboarding of new vendors by creating a contract with the help of a standard template that reduces the time and scope of human error. In addition, all the significant terms, conditions, and guidelines remain uniform across all these contracts to avoid any discrepancy.
- Purchase Order Management becomes more Streamlined
Automated purchase order administration increases the potential of your Enterprise Resource Planning (ERP). This equips you with the capability to more efficiently handle immediate spending and customer-supplier relations.
When purchase orders are generated, these automated systems speed up all the confirmations, monitor due payment dates, change status, and inform your vendors of relevant PO revisions. All purchase order specifications and customer-vendor interactions can be tracked immediately with every purchase order and can easily be synced and integrated into the ERP.
- Better Visibility into Historical Spending
The indisputable point of any automation is always the generation of top-quality data. In the case of procurement automation, this relates to presenting an exact representation of past acquisitions, vendor quotes, previous contracts, purchase archives, and many more.
By employing procurement automation, you can hold a consolidated view of exact expenses when making new procurements. Furthermore, it helps in continuous cost savings, streamlining the spend management, and further aids in identifying the loopholes. In fact, top-class procurement companies hold around 18 percent lower procurement expenses when compared to their peers.
- Enhances Overall Productivity
With the entire procurement process accessible with a single click, the acquisition team can receive a real-time update of the complete acquisition cycle. In an automated procurement system, the team leaders have enough time to perform strategic planning. They can also receive all the necessary data without driving through various systems.
It further enhances their decision-making powers and adds to the productivity of the procurement process. According to the latest survey, by systematizing and automating everyday responsibilities, businesses can function with 21 percent reduced labor costs, resulting in cost-savings and generating higher returns.
- Easy Document Management
As business operations increase, more trading allies, and vendors are onboarded routinely. Hence, it becomes difficult to manage business interactions, agreements, purchase orders, bills, and a multitude of other records that are exchanged between internal and external sources.
With the help of procurement automation, businesses can easily share and administer all different types of documents easily with the vendors. This automation process further ensures that the vendors automatically receive the latest updates of manuals, invoices of goods, along with all the required specifications, so that they can meet your demands and deliver accurate supplies.
In addition, uploading your records into these procurement automation tools will enable you to share the newest version of existing records with your vendor automatically. Businesses can even demand a vendor to validate receipt of your record and quickly send alerts to vendors who delay accepting the purchase order, aiding in liability and better vendor performance for an expedited procurement.
Top Procurement Processes To Automate For a Better ROI
The new-age procurement automation solutions are designed to optimize purchase orders, vendor management invoice approval, contract management, and all other processes within a single platform. However, if the main purpose of your organization is to maximize your ROI through the adoption of procurement automation, then you must focus more on automating these 5 processes mentioned below.
- Procurement Requisition
Most times, purchase requisitions get stranded and take up a lot of time to pass through the complicated hierarchical arrangement. Automation of the procurement process will not just reduce the endorsement cycle period but further eliminate additional steps in the process and allow the procurement team to yield more returns in less time.
- Purchase Order
According to a recent study, around 44 percent of businesses agreed on holding pressing shortcomings in their purchase order systems despite possessing an organized purchase order policy in action. Hence, procurement automation empowers businesses to automate the complete purchase order cycle with an increase in productivity and decrease in expenses.
- Invoice Administration
Manual invoice administration generally implies deferred payments and agreement concerns. By adopting procurement automation, invoice administration becomes uniform, with features varying from touch-free permission of official invoices with lower amounts to extensive serviceability through easy integrations with all the accounting and finance tools in an organization.
For instance, Procurement Partners can expedite your invoice assent by automating the two-way review and streamlining your approval system. You can further analyze personal invoices against predefined company practices and available purchase orders and procurement receipts in a single click.
- Supplier Management
Without a definite plan of compliance and process clarity, businesses will end up causing a lot of stress on their supplier relationships. With automation, acquisition units can streamline and simplify all their supplier selection and choose the most suitable supplier.
By automating this supplier management process, businesses can quickly identify and settle grievances, creating a healthier relationship with their supplier. This healthy relationship will allow them to receive more bulk discounts on the procured goods and create a better profit margin for maximizing the returns.
- Contract approval
In manual contract administration, all procurement contracts are simply stored in a physical filling cabinet, which can be disorganized and difficult to review. Finding procurement contracts or even holding labels on them can be a substantial hurdle.
Automation of this procurement process systematizes all the procurement contracts in a single repository that can easily be accessed. Furthermore, it warrants that all the contracts remain consonant and specific.
Procurement Automation Software For Maximizing Your Returns
The automation of the procurement processes can fix numerous problems, including enhanced procurement effectiveness, cost minimization, and obtaining an economical acquisition rate without jeopardizing non-compliance. Other vital advantages incorporate more efficient acquisition clarity and transparency, magnified administration, and cloud security along with better optimization of the supplier base.
With the help of automated procurement software, your procurement team can have a standardized and centralized procurement process that improves clear and effective spending. Such software presents users with a single portal to place all their purchase orders and process invoices for all the vendors.
The software assists businesses in managing comprehensive procurement processes like invoice and supplier administration. It also presents access to a built-in record-keeping feature that can unveil all their spending practices and provide actionable insights to negotiate more favorable deals for a better ROI.
Automating the procurement process brings a multitude of advantages to every business. Cost savings are enhanced while reducing maverick and off-contract spending. More actions can be taken under administration, including all the tail spend, and the procurement unit holds more comprehensive clarity over its processes, enabling them to mitigate uncertainty efficiently and maximize productivity and supplies.
