Business procurement is a complicated task that involves complex processes and outsourcing services. The procurement department helps an organization in the purchasing of resources at a discounted price. Further, it helps the organization save time and cost involved in the procurement of materials. Also, it helps fuel the growth of an organization by being cautious about the spending and many other benefits procuring process can bring.
The problem with this procurement process is that it consumes a lot of time and money. And businesses in the entire world are willing to invest a lot of time, money, and effort in their procurement processes but still see failures or don't feel like they are getting valuable results from it. That is why businesses are looking for new ways to make their purchasing process more efficient. And there are quite a few ways for this — applying automation technologies to the process can be interesting for many businesses.
In this blog post, I am going to go over several ways you can successfully optimize your own small and medium-sized enterprise (SMEs) procurement process so you can spend less time worrying about it and more time actually doing business!
What Is Procurement Process Automation?
Procurement automation is the process of automating manual, repeatable steps and labor-intensive tasks in the procurement process. By helping procurement workflows to self-execute, procurement automation frees up the procurement team to focus on other critical business activities while speeding up processing and maximizing your business's efficiency.
Procurement automation software lets you focus on business-critical activities like decision-making and strategizing. It transforms the procure-to-pay process while keeping the cost down.
Why should your Procurement Process be automated?
Before we get into the ways of automating procurement operations, let's first discuss the benefits of procurement automation and how it may help enhance a company's working processes.
Speeds up the Approval Procedure - Usually, procurement process delays occur during Purchase Requisition (PR), Purchase Order (PO), or invoice approvals. Streamlining the PO or PR approval procedure allows for faster order placement and reduces ordering cycle time.
Gives you insight into your spending - Procurement automation provides insight into the previous spending. The automation software keeps track of earlier purchases, contract terms, order histories, and supplier bids. Workflow automation gives a consolidated view of actual spending, which may be used to make data-driven management decisions.
Stops Manual Errors - Manual processing is prone to errors, requiring personnel to spend extra time correcting mistakes and redoing lost paperwork. This results in increased labor costs. Automation software is the answer to this problem, according to all business leaders and staff, and can help eliminate manual errors.
Encourages trust and reliability in Supplier Relationships - A clear line of openness and transparency with your suppliers is critical to successful supplier management. Automation makes it easier for customers and suppliers to communicate in real-time and follow order status. With a more automated and responsive system, suppliers can react to bids more rapidly, and buyers can assign orders to the best offer available. Because the entire process is visible to all stakeholders, it saves time, ensures optimal costs, and accelerates the resolution of grievances.
Maintains a Central Contract Repository - Your company works with a number of different vendors. When onboarding a new supplier or renewing a contract with an existing one, the terms and conditions are usually the same. All of your contracts may be stored in a central repository and accessed with a single click with procurement automation. It facilitates the onboarding of new suppliers and ensures that all necessary T&Cs and rules are adhered to throughout all contracts.
Boosts Overall Productivity - The procurement workflow's repetitive and redundant operations are handled via automation. Employees are liberated from these responsibilities, giving them more time to focus on strategic objectives. Employees can get information quickly without having to browse different platforms. Procurement automation not only improves efficiency but also gives you complete control over the procurement cycle.
How do SMEs automate their procurement process in 7 easy steps?
The procure-to-pay cycle can be automated to increase operational efficiency while also lowering costs. Employees can focus on business-critical activities like decision making and planning by using procurement automation software to remove them from low-value, labor-intensive processes. The following is a step-by-step breakdown of how to automate the procurement process.
1. Analyze Your Present Procurement Methodologies.
To figure out where you can save time and money by automating your procurement process, you must first map out your present procurement procedure.
According to Raconteur's research Procurement and Supply Chain Innovation, 60% of business leaders believe that examining their present procurement procedures before investing in transformation will provide them with the knowledge they need to effectively move to digital solutions. Despite their belief, 82% of them utterly miss this stage.
Don't let yourself off the hook by skipping this stage. It will assist you in identifying areas where repeatable tasks can be automated to expedite the process.
Use the Business Process Modeling Notation (BPMN) to create a flowchart that depicts the steps of your process.
Remember to write down all of the steps, including the following:
- Needs identification.
- Purchase requisition.
- Supplier research and selection.
- Supplier negotiation.
- Purchase orders.
- Invoicing and payments.
- Delivery and auditing.
2. Examine Current Procurement Processes to discover possible areas for automation.
You need to identify bottlenecks in the workflow now that you have a map of all the tasks and stakeholders involved in each step of the procurement process.
Bottlenecks frequently arise where there is heavy human effort, such as filling out forms or authenticating data.
Automation features like auto-population and auto-validation can eliminate these steps and considerably speed up the procedure while eliminating errors.
Examine the process for bottlenecks that slow it down or increase expenses, such as:
- Which process takes a longer time than others?
- Which stage is riddled with bottlenecks?
- Which tasks are prone to errors?
- And which tasks incur significantly higher costs?
Similarly, consider where there are recurring processes, such as extensive data entry or locations where staff must physically deliver documentation to approvers.
In general, repetitive tasks can be automated.
3. Determine Key Automation Areas.
These bottlenecks and repeated operations can be automated in two steps. You must first digitize these procedures. You can then automate them.
Examine where in your procurement process you can convert from manual to digital processing.
All manual purchase request forms and purchase orders, for example, can be converted to dynamic digital forms.
Not only can you access forms online and save digital copies, but you can also link forms to your existing databases to auto-populate forms and validate data.
When it comes to approvals, digitizing forms and including e-signature capabilities means that procurement documentation may be approved from any location.
You should also consider switching to digital invoicing and migrating manual record-keeping to digital software.
Examine the dynamic sections of the process where one stage of the workflow transitions to the next. What can be digitized and automated to increase efficiency?
Staff should not send forms through email or, worse, by hand. You can use automation tools such as TranZact to automatically route forms and paperwork to the next stage of the process, as well as send them to approvers for online signature.
4. Choose the Best Procurement Automation Software for Your Business.
To automate your procurement procedures, you'll require easy-to-use procurement automation software like TranZact.
When looking for automation software, 40% of businesses agree that the largest roadblocks are training and set-up costs.
Look for technology that is simple to use so that your personnel requires minimum training. It should be simple to migrate to and integrate with your existing systems. This ensures that you will not waste time setting it up.
You'll need cloud-based, mobile-ready software to provide access from anywhere. This is especially critical when dealing with distant teams.
Finally, ensure that your automation platform has a wide range of functions to support dynamic digital form development, complicated routing, and online approvals.
To meet all of these conditions, Atomberg Technologies chose TranZact.
TranZact is a zero-effort digital transformation tool and platform for SMEs to digitize business processes right, from customer inquiry to dispatch. It is a cloud-based software that helps Indian SMEs and manufacturing concerns streamline their entire business and make their organization to be in a position to make data-driven decisions for their firm's future.
5. Develop new automation workflows.
Choosing the correct procurement automation software facilitates implementation. Using the new software, new and enhanced workflows must be created. Each task must be viewed as a separate workflow and constructed separately. As you create the processes, remember to include the approval and conditional routing phases. TranZact includes a simple workflow builder that allows you to create processes in minutes.
6. Implement and test new workflows.
The next stage is to implement new workflows when they have been designed. Stage-by-stage deployment is more effective than automating all operations at once. Once the implementation is complete, new workflows must be tested. Testing newly introduced workflows for performance and execution time aids in determining the efficacy of implementation.
7. Measure and Improve.
Measuring the results is the greatest technique to ensure that the process automation provides the expected results. The performance of the new workflow may be evaluated using procurement key performance indicators (KPIs) such as purchase order cycle time, lead time, purchases in budget and on time, and so on. Periodic performance evaluation aids in continual process improvements that assist connect the procurement process with the overall company purpose.
The following five purchase procedures are excellent candidates for automation:
- Purchase Requisition Management.
- Invoice Management.
- Purchase Order Management.
- Vendor Management.
- Contract Approval.
The question of "will procurement be automated?" has been replaced with "which software is ideal for automating the procurement function?" Progressive firms that want to boost overall efficiency are automating essential business process routines. TranZact assists you in automating your whole business workflows with no effort on your part. Sign up for free now.