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Procurement is a business process in the fullest sense of the term. It plays a key role in business strategy, involves a number of workflows, and requires input or action from multiple departments.
According to the Deloitte Global CPO survey 2019, 61% of chief procurement officers (CPOs) agree that procurement-related risks have been on the rise over the past year. Some of the top risks highlighted in the report include economic downturn, internal complexity (at product and organization levels), and managing risk with suppliers. Additionally, there is a chance of potential supply chain disruption, especially amid current supply chain crises.
To minimize these risks, organizations need a procurement process that functions effectively even in difficult scenarios to help them keep their supply chain flowing, ensure that sourcing efforts are not disrupted and to streamline and optimize crucial processes.
By digitizing and automating workflows through procurement software, a company will increase productivity, eliminate repetitive work, and minimize human errors. It is easier for requesters to send purchase orders, for the finance team to execute them, and for managers to track the budget and report results. Let’s dive into a few of the benefits of using a procurement management solution:
1. Automated Processes
An automated procurement software helps to centralize data and information about your finance processes, while offering protection of your data by setting rule-based permissions for data access. Automation also eliminates repetitive work and decreases the likelihood of human errors in critical tasks, like creating a purchase order, where the request typically originates with a request from an employee.
By leveraging customizable and shareable forms, self-service portals, and purchase requisition capabilities, request management will be more comfortable and practical in addition to being able to track order status. This way, your team has full request visibility, receives all requests in one place, and won’t have to follow up with every request manually.
2. Optimized Approval Processes
Procurement flows can carry complex approval processes and siloed communication channels. This can create delays and bottlenecks that can harm the entire finance operation. Automation empowers finance managers to easily create an online form to collect all the information required to kick-off a process, automated data-entry on specific cases, and good visibility over all active requests. This is key for organizations managing a large number of inbound requests from a variety of channels and stakeholders.
A great example of processes improved by automation workflows is approving vendors. Identifying and vetting vendors is an important part of procurement. By establishing relationships with multiple vendors, a business can avoid supply chain disruptions and create incentives for better prices from the vendors.
By automating the approval flow process, fintech managers can create end-to-end workflows across the procurement ecosystem. Rules can be set to define approval channels (even vendors outside of the finance organization), setting a baseline for price analysis, and for automatic notifications to key approvers, among others.
3. Improving communication and governance
Better tooling can help with compliance and governance in your organization. Automation rules and self-service portals not only improve communication channels, but ensure that any procurement request is adhering to the rules set by your organization, IT or other governing agency. Admin settings protect data by only giving access to necessary parties and can trigger alerts if the wrong people try to access protected information.
4. Real-time spend visibility
Once a need has been identified, and goods or services ordered, there will be a workflow for confirming and documenting receipt of those goods or services. Often this will include a three-way matching process.
When procurement teams register all processes in one place, spending can be monitored in real-time. Many low-code solutions have the ability to integrate with and extract data from existing/legacy accounting software, ERP systems, and inventory management tools, such as SAP, Oracle, Quickbooks, and more, so that teams can quickly analyze and report your results.
5. Eliminating bottlenecks faster
Digitizing your procurement and purchasing processes can also help managers better track and identify issues with existing processes and offer solutions to gain greater efficiency.
By structuring your workflows in a tool that allows you to see every step of the process, managers can easily extract data, such as how resources are being used and how long each activity takes in a phase such as paying invoices where a reconciliation process between invoice, PO, and goods received note are all required.
All major market players are investing in digital transformation and structured workflows to increase their operation’s efficiency. Whether your current processes aren’t working efficiently, your team has become prone to human errors, delays in payments are resulting in fines and a problematic relationship with suppliers or enhanced collaboration among teams is needed, procurement automation plays an integral role in improving your overall business strategy.
Anath Avva is President and COO of Pipefy.