Is procurement software only a necessity when your organization’s purchasing runs across multiple international borders, crosses multi-million dollar figures, and deals with hundreds of vendors? Or can it make a huge difference in a smaller or mid-sized business too? The short answer is that it definitely can have an impact on procurement operations in a range of sizes. Procurement software makes a huge difference in the way purchasing is executed.
To help you better understand the impact of a software-based procurement system, here’s a brief explanation of how it affects these common procurement processes.
Zdnet reports that 57 percent of respondents in a survey said they spent more time working with vendors than they did two years ago. One of the reasons for a supplier management horror story at Boeing was poor vendor management. Managing vendors and analyzing their performance is a crucial part of the overarching set of procurement processes.
Within vendor management, you need a clear and transparent look into the process. This is important, as a lack of insight into it can cause cracks in vendor relationships. With inbuilt reporting modules, you can locate and take care of issues, keep track of red flags, and thereby identify poorly performing vendors.
It’s a two-part solution for better vendor management. First, your organization can easily spot and solve grievances that arise, preventing any strain on existing relationships. Second, keeping track of vendor performances helps you avoid prolonged business relationships with poorly performing vendors.
Purchase requests and purchase orders
With both purchase requests and purchase orders, the primary area of concern is the lack of processing speed, as the request or order slowly wades through bureaucracy and hierarchy.
How? In a paper-based traditional system, purchase requests and purchase orders are slowly passed on from stakeholder to stakeholder. Even in an email-based system, the process is slowed down by bulky email threads and hard-to-understand spreadsheets. In a system like this, a lot of time gets wasted pouring through musty archives and scrolling through seemingly endless spreadsheets. In fact, 43% of organizations admit to flaws in their PO practices, even when they use a formal PO system.
A digital system helps you ensure smooth transitions, and lets you remove all redundant steps in the process. You can also choose to automate the entire purchase order cycle, achieving better productivity and efficiency in PR and PO processing. The numbers don’t lie, either. Digital procurement systems have been shown to reduce processing costs by 81% and processing time by 83%.
Other approvals–invoices and contracts
Consider these features, usually found in procurement software:
- Remote approvals, where stakeholders can approve invoices, POs, PRs, or contracts on the go, using a mobile app.
- User role control, where roles and responsibilities can be allocated according to the way your procurement team is structured.
- Real-time and custom reports, which help you understand the current status of any approval, whenever you need it.
These common features are designed to help you run approvals smoothly, with minimal delay and no errors caused by manual oversight.
With contracts, this means that every last contract you sign is accurate and never gets lost or misplaced. And with invoices, you stand to gain an even more significant advantage. With software taking care of invoice approval, you can actually avail early payment discounts, and keep track of receipts, calculate shipping charges and taxes owed, and ensure that you pay all your invoices within the agreed deadlines.
There’s no denying the power of digital procurement
These are only a few examples of procurement processes that are transformed when you take advantage of software solutions. With purpose-specific apps taking care of processes like purchase requisitions, purchase orders, invoice approvals, three-way matching and more, you simply can’t deny the improvement that software solutions offer.
No matter if you are a small business or a massive enterprise, procurement software can deliver extraordinary value to your company. If you are still managing procurement with spreadsheets and email, it’s time to upgrade.