Everyone likes the sound of digital processes, but is your team ready to take your procurement department completely digital? Far beyond just hosting a few forms and documents online, procurement processes can get a huge boost from taking everything online, from vendor management to purchase orders, with an interconnected system.
We’ll take a look at some top procurement trends within the procure-to-pay process cycle, and how technology is providing the solution. Comparing and contrasting this against your organization’s style of purchasing, you might just see some room for improvement, or know what you’re doing right.
Digital possibilities within procurement
Digitalization opens up a whole host of advantages, as this look at purchase orders illustrates.
The traditional way of dealing with purchase orders is to depend on the physical print copies of POs, keeping track of them using a spreadsheet. The traditional system has now been replaced, because of issues with manual processes:
- Purchasing staff frantically searching for the right PO, while an irate vendor POC waits for clarification on an archived order
- Unnecessary expensive processing costs
- Confusion within the process, leading to the wrong POs getting approved, customer orders getting delayed, and approved PRs (Purchase Requests) not initiating the respective POs
- Vendors getting frustrated because of PO approvals getting delayed
- A dangerous culture of complacency within the procurement team
It doesn’t matter if you’ve moved from printed PO-based systems to emails. The problems don’t get eliminated, they just become a little different.
- Delays caused by someone missing an email notification
- Searching through archived POs becomes a difficult trawl through multiple inboxes
- Inaccurate data because someone entered a wrong digit into a tracker spreadsheet
Purchase order apps, usually found within digital procurement solutions, cover all these error-prone areas. They can route approvals to the right people in the right order, and centralized cloud-based storage results in no lost, misplaced, delayed, or inaccessible POs.
Vendor management is more important than ever
Procurement experts in 2019 are focusing quite heavily on supplier management, and your team should too. This report from Deloitte, on the re-shaping of procurement, shows why: it lists supplier management as one of the biggest prone-to-risk areas.
The key to mitigating this risk is by studying spend data. By studying the amount you spend on each vendor, you can better predict trends and choose vendors accordingly.
When you closely study supplier performance, you gain insights into assessing a vendor’s actual capabilities (as opposed to their proclaimed ability, which may not be the same), and their activities within a contract. Both of these help you make informed decisions on which vendor to go with.
Consider the crucial factors that play into most procurement decisions:
- Consistent quality of products or services
- Reasonable pricing
- Strict adherence to deadlines and delivery schedules
It’s easy to see how much vendor management influences these factors, and why makes so much sense to place an added emphasis here.
Automation makes its presence felt
Automating the procure-to-pay cycle, according to this report, offers a 70 percent increase in productivity, 66 percent more control over the P2P cycle processes, and a 65 percent reduction in costs.
Within procurement, automation can step in and reduce the processing time on repetitive, predictable tasks like approvals for invoices, purchase orders, and purchase requisitions. This means that employees are freer and now have the ability to focus on tasks that actually require human effort, like making tough decisions and making strategies and plans.
As the numbers prove, automation consistently delivers a reduction in costs. It also boosts efficiency within procurement processes, helping you run P2P tasks much quicker and with consistently successful results.
Where do you stand?
In 2019, given the close competition in business across verticals, there is no room for complacency. In heavy-spending areas like procurement, the move to digital is more important than ever.
Having read about these trends, where do you think your procurement operations stand? Have you already embraced the digital approach to purchasing, or do you feel like it’s time you did?
