How Can A Procurement Management Software Benefit Your Organization?
Every company does some form of purchasing. It could be for complex manufacturing processes, product requests, contract management, or simply for common office supplies. How these processes are handled vary greatly from organization to organization. Some use a spreadsheet or quick books. Some use more sophisticated software solutions. But there is accountability in every organization.
How is it done today?
Manual procurement operations are filled with high processing costs, lost or misplaced documents, slow approval cycles, missed discounts, and uncontrolled costs. Additionally, the supplier relationships may suffer due to late payments, poor vendor management, inefficient dispute resolutions, and more.
Relying on outdated, paper-based processes to handle procurement management activities is both costly and prone to errors. In fact, it probably costs companies more along the way. It is, therefore, well worth considering how digitizing the procurement process can offer tangible benefits.
Procurement management is the strategic approach to manage and optimize organizational spend. It involves purchasing quality goods and services from specific vendors within a stipulated budget, on or before the deadline. The procurement management process includes sourcing, requesting, ordering, expediting, inspecting, and reconciling.
Expected Functionality Of A Procurement Solution
The workflow phases included in a procurement process are very complex, so a system should be equipped to handle:
- Category Management: A strategic approach to procurement, where the organization segments its spending on bought-in goods and services. The segmentation arranges goods and services in discrete groups depending on their functions.
- Supplier Management: It’s a structured functionality to manage suppliers and improve their impact on the company’s business. It includes managing vendor deliverables, working collaboratively to co-develop new processes, managing compliance as well as payment of invoices.
- Invoice to Pay Processes: The invoice-to-pay processing cycle is a primary step in supplier payments operations. Once an invoice is received from a supplier, it must be read, assigned a billing code, and sent for a purchase order matching process.
- Source to Contract Processes: This part of the workflow refers to the collective set of procurement processes adopted when sourcing products or services. It begins with analyzing the product or service requirement and developing a sourcing strategy. It advances to the request for quotation (RFQ) and contract negotiation phase before finally awarding the contract to a suitable supplier.
- Procure to Pay Processes: It’s the coordinated and integrated action taken to fulfill a requirement for goods or services promptly at a reasonable price. It involves several sequential stages, ranging from ‘need identification’ to invoice approval and vendor payment.
In order to be competitive in their respective industries, companies are placing more emphasis on the strategic value of their procurement processes. Innovation through automation is essential to increase its value and its importance.
There are several benefits gained from automating procurement operations. Some of the most significant ones are described below.
- Increased influence and visibility over spend and cost reduction. Procurement solutions structure spend across suppliers by making it easy for employees to find what they need and direct purchases to authorized providers. The application also centralizes tracking, which helps leverage volume and lowers costs for the buyer.
- Increased operational performance. These solutions help automate internal procurement processes, such as purchase order tracking and supplier evaluation, leading to higher operational efficiency.
- Internal integration. Automating the procurement process eliminates information asymmetries and improves collaboration across internal departments, providing maximum value to the organization.
- Increased data accuracy. Procurement management solutions standardize, streamline, and automate traditionally manual processes. As a result, purchase approvals are easily managed, and resources are freed up for more strategic activities. Centralized tracking of documents and transactions enables full reporting on requisitions, items purchased, orders processed, and payments made.
- Global procurement processes. These cloud-based applications support various currencies, languages, and logistics options, providing the ease to source from countries across the globe.
- Big Data analytics advantage. A variety of analytic tools help report compliance, spend, and supplier information. This data provides valuable decision-making and forecasting information for procurement professionals.
- Value engineering. Tools that help analyze price points need to also show value with cost reduction models after sourcing. This is done through strategic alliances, partnerships, collaboration, and integration to other systems.
- Process improvement. Systems should use the standard models, including LEAN, Lean Six Sigma, IS, and more integrated into systems to get the most benefit.
- Standardized Workflows. Using an automated procurement solution will standardize workflows and reduce the need to deviate from the predefined processes, resulting in greater efficiency. Documents are routed through the correct channels, and when the right approvals are made, orders are placed with the right vendors under the current contract terms, ensuring no purchases are made off-contract.
By The Numbers
According to an Aberdeen Group study, companies that adopt Procurement Management solutions will experience the following benefit statistics:
- Reduced off-contract spend by 64%
- Reduced prices by 7.3% for spend brought back onto the contract
- Reduced requisition-to-order cycles by 66%
- Reduced requisition-to-order costs by 58%
- Increased total spend under the management of procurement by 20%
These numbers all add up to an important fact: where visibility exists, control over spending is easier to implement. That is why POMS, Seldat Technology’s Procurement Management Application, should be your solution of choice.
Benefits of Managing Procurement with POMS
Working with a Procurement Management Software such as Seldat Technology’s POMS is a smart way to improve procurement management activity and achieve the metrics above.
POMS makes real-time tracking of purchases, approvals, associated documents, and other pertinent data incredibly simple. This easy-to-use, easy-to-implement platform will adapt to companies of all sizes and will reduce supplier risk, help control spending, and improve companies’ profit margins.
By implementing its sophisticated automated features, companies can reduce error rates, processing time, and human intervention, leading to lower overall costs and power given back to procurement teams to focus more on value-adding activities.
A Procurement platform helps businesses become more agile by allowing them to control global spend with flexible management and visibility tools, and simplifies operations by consolidating and managing each phase of the procure-to-pay process.
A complete, cloud-based option that will enhance your P2P processes is Seldat Technology’s POMS. The solution not only modernizes procurement business processes so organizations can proactively manage suppliers, activities, and documents throughout the purchasing cycle but also provides fast and compliant procurement services to all areas of an organization. Companies from all sizes - large, midsize, and growing businesses - can benefit from this complete and easy-to-use software. POMS delivers a quick ROI, which results in savings reaching the bottom line.
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