How to manage Procurement Process efficiently to reduce costs and risks

Procurement management

Is your procurement process slowing things down?

Are you using traditional ways to manage your procurement process? If your answer is yes then, it is time to boost your buying steps.

The digital revolution has started to disrupt procurement processes in the last couple of years like many other business processes. 85% of executives believe that digital transformation will alter the very fabric of their purchase process, yet only 32% have a digital strategy in place.

In the past, the process of procurement only took care of the nuts and bolts of resourcing, but latest process management technologies and automation have made it a profit-pushing strategy that empowers C-suit decision-makers. 

Procurement process managed effectively can create market visibility, minimise supply chain risks, and deliver substantial cost savings.


What Does Procurement Process Mean?

procurement system

In the simplest terms, it’s the buying of goods and services, but it includes all processes from purchase planning to value analysis and even disposals. The procurement management must achieve a profit on resale, and to do so, it must source finance cheaply and negotiate intelligently.

The old incarnation of procurement management could succeed simply by operating more cheaply than the average business, but today’s standards are higher. While world-class procurement departments operate 20% more economically and employ 27% fewer employees, that’s no longer enough.

What does procurement mean in the modern era? Sometimes, intelligent spend management; often supplier sourcing; but always digital strategy.

What are the steps in Procurement Process Flow?

Procurement process flow can be broken down into: procurement process, systems, people, and paperwork. Overall procurement process entails broader tasks like ordering, payment fulfillment, and receiving.

Procurement Process flow includes eight purchasing process steps:

      1. Requesting for a service or product

      2. Procurement Analysis to evaluate request

      3. Forward a request for proposal to suppliers

      4. Supplier Selection

      5. Procurement Manager evaluation and approval

      6. Approving the request with a purchase order

      7. Sending the purchase order to the supplier

      8. Receiving the product and confirming the delivery of services or goods (Three-way matching)

      9. Approve the invoice and forward it to payment processing

      10. Recording the transaction for the company’s records

Procurement Process Flow
Kianda – Procurement Process Flow

Why Automate Your Process of Procurement?

Excel spreadsheets and emails belong in the old age with paper procurement documents. Automated workflows that a procurement software can provide allow organisations to automate everyday tasks without human intervention. Repetitive events in software procurement can be scaled up automatically.

The procurement cycle can, and should, be digitised, not only to help you refine your strategy, but to automate it and generate a set of analytics to assess its efficiency.

Procurement software can include all the steps you’ve always used in your purchasing process. It cuts the risk of human error by automating repeatable tasks. There is no difference in procurement meaning whether you’re using digital or manual processes. Only its efficiency and transparency changes.

It can cut steps out of procurement process flow and speed up real-time interactions, but you remain the brain behind your strategy. You make the rules, editing your workflow according to your decisions.

Another important reason why to automate your procurement is to gain visibility of your procurement process. It can help to track the way your buying department manages their part of the process.

As a result of digital procurement in business, the procurement meaning has evolved to include intelligent spend management, which is more transparent than ever before thanks to digital workflows. Collaboration with suppliers is as important as ever, automation can make certain steps that they should be involved accessible to them.

This way, everyone from the procurement team to suppliers can give you input on a single platform, helping to give you full visibility of process progress easily.

Using a digital procurement system contributes to your paperless office, keeping your documents in one place. Procurement documents define contractual relationships, and automation helps to prevent important losses, keeping all your contracts in the digital sphere.

Procurement Software and Tail Spend

Small purchases tend to go unmanaged thanks to the resource-heavy manual work required. To fix the problem, the procurement process must engage suppliers, amplify transparency, and optimise inventory.

Monitoring key performance indicators, risks can be identified and procurement process strategies can be refined.

The procurement management system should monitor:

      1. Compliance rates that increase spend and lead to invoice disputes.

      2. Supplier defect rates, which cause unreliability.

      3. Supplier lead time, which improves delivery time

      4. Purchase order cycle time

      5. Purchase to pay time

      6. Cost per invoice and purchase order, which tends to suffer when there are invoice disputes

      7. Spend under procurement management

      8. Procurement procedure return on investment

What to look for when comparing Procurement Software options

Digital procurement process can be efficiently achieved with a process automation software. Digital process automation is the obvious driver of improved metrics, but the analytics themselves are still a crucial ingredient. They can be used to forecast future crises and optimise vendor evaluation. They can also improve invoicing procedures and predict demand.

Process automation software gives you full flexibility in terms of tailoring process according to your organisations unique needs.

Regardless of whether you’re handling the procurement of services or product procurement, there are several features you should be looking for when comparing procurement software options to help you improve your procurement process.

Procurement software benefits
Procurement software

Here is a list of what to look for when comparing procurement software:

      1. User-friendly customisation and scalability

      2. Accessible data and analytics

      3. Easy reporting

      4. Available in multi-devices

      5. Automated reminders and notifications

      6. Easy, multi-layered approvals

      7. Budget control

      8. Providing suppliers instant access for their input

      9. Data integration with existing systems

The modern process of procurement no longer fears risks – it predicts them.

Procurement is a constantly evolving organism, and metrics help it to advance. Procurement software de-clutters your purchasing process steps and improves its transparency, giving you control over the entire procurement lifecycle.

As a result of using digital procurement systems like Kianda, the procurement business definition has transformed from a transactional task to a transformational one.

Procurement in business has become more complex, but that’s a boon rather than a bane. Procurement procedure has never been this scalable or innovative thanks to digitalisation, and it’s put CTOs on the map.


Procurement Process Dashboard
Kianda – Procurement Process Dashboard

 

Are you looking to boost your procurement process?

Why not start a Kianda free trial and discover how you can reduce risks and bring efficiency to your purchasing. Kianda Procurement Process App is designed with our experience and best practices in mind.

Good news is that you can tailor all the pieces of the app to fit what your organisation needs. And remember you do not need to hire developers to manage the app. Anyone with or without programming skills can create business process apps with Kianda.

Get the Procurement Process App

About Author:
Osvaldo Sousa – Digital process automation expert with almost two decades of experience in information technologies. He is the CEO/Co-founder of Kianda Technologies.
 
 
 
Other articles you might be interested:
 

Purchase Order Process

Digital Construction Process Automation

Digital Construction
Digital Construction

CIF Digital Construction Summit 2019

We look forward to sponsoring in CIF Digital Construction Summit 2019 in  Dublin, 13th June. Come and talk to us to discover how Kianda can help you accelerate your digital construction journey with process automation.

DIGITAL… THE END OF CONSTRUCTION AS WE KNOW IT?

CIF Digicon 2019 will bring together developers, planners, architects, engineers, contractors,  and other key stakeholders in the construction industry to explore best strategies and solutions to embrace digital transformation focused on the road to Construction 4.0.

Kianda is a digital process automation platform helping companies easily automate and manage their business processes through digital forms and workflows.

Related Articles:

Case Study – Mercury Engineering Streamlines Project Approval with Kianda Forms and Workflows

 

How Construction Industry Can Benefit From Digital Process Automation

According to Forrester report 22% of companies haven’t begun their digital transformation. Are you one of them?