A procurement system, also known as a purchasing system, allows companies to automate purchasing goods/services and maintaining inventory. It manages all the procurement-related processes, including:
- Sending purchase orders
- Generating purchase orders
- Selecting and managing vendors
- Approving delivered goods/services
- Reviewing invoices.
The Modules of an Ideal Procurement System
- Purchase requisitions
Make purchase requisitions and check the status updates concerning any of them in real-time.
- Purchase orders
The procurement system should let users generate purchase orders from approved purchase requisitions. You should also track, manage, and view all the purchase orders anytime, from any device.
- Vendor management
A centralized database is necessary to capture all the vendor information without duplication. It should also enroll new vendors from within the PO generation process to save time.
- Purchase invoices
The tool should cross-check data in purchase requests, purchase orders automatically, and invoices to get quick approvals and clear payments on time.
- Third-party integrations
The procurement management system should integrate with other business applications daily and ensure your employees don’t spend too much time shifting between different presentations.
- Procurement Analytics
The ideal tool should drive actionable insights from the procurement data, allowing you to track key performance metrics and generate customized reports.
Best Features To Look For In A Procurement System
To find the right online procurement system, start listing your business requirements first and then look for a tool that matches those exact requirements:
Ideally, these are the essential features that an online procurement system should possess:
Customizable interface and workflows
Every company has its set of requirements. The online procurement software you choose should be easy for you to create a customizable interface and workflows according to your company’s custom purchase order process.
Cloud-based access for quick approvals
Design a tool that can be accessed from anywhere and from any device to get real-time notifications and give quick approvals for different segments of the procurement process.
Tracking Real-time Budget
The procurement tool should give the correct information at the right time for the stakeholders to make smart purchasing decisions and speed up the approval process.
Accounts payable invoice automation
Make the software automate your invoice approval process with three-way invoice matching. It must verify and match the data from purchase orders, receipts notes (GRN), and invoices to assure no discrepancies.
Supplier lifecycle management
Managing supplier relationships and mitigating supply chain risk is one of the critical functions of procurement. So, ensure the procurement tool should be able to onboard, manage and monitor your supplier’s performance.
Visual and customized reports
The online procurement tool should obtain data and generate customized reports to drive actionable insights. By understanding your company’s procurement process through visually rich reports, you will be able to make better data-driven decisions.
The procurement system must have seamless integration functionality to connect with your existing accounting and ERP software easily.
Online Procurement Systems Categories
In general, there are 3 main categories of e-procurement systems.
- The first category focuses on improving the transactions and the company’s decision-making capabilities. Companies deal with hundreds of transactions weekly, but these applications simplify the process and help promote stronger relationships between consumers and suppliers.
- The second category of online procurement systems involves handling assets. Systems in this category provide maintenance scheduling, inventory management, in-house product availability, and other similar services. These applications are helpful for businesses that need to keep a close idea of the quality of their direct/raw materials in stock.
- The third category includes systems designed to optimize a company’s production operations. Many similar applications deal with the entire production cycle, including the purchasing of materials when the inventory runs low, managing supplier contracts, and the production schedule.