Four ways organisations can modernise their procurement

Discover four ways in which organisations can modernise their procurement functions, according to SoftCo, a financial process automation company for P2P

Responsible for purchasing, supplier relationship management, cost control, spend and so much more, Procurement’s reach in an organisation is vast, and continues to grow both in the functions it encompasses and its level of priority. 

As such, many are seeking new process designs as they strive to tackle the demand challenges and increasing complexities. 

“Traditional, manual procurement processes rely heavily on phone, email and paper-based communication for requisitions and order management. Without moving to modern procure-to-pay software, processes are time-consuming, cause errors and offer very little insight into the process [...] Best in class procurement teams overcome these challenges by restructuring the way that they deal with key stakeholders such as suppliers. The key is in automating minimal, time-consuming tasks, and controlling costs,” said SoftCo. 

Four ways organisations can modernise their procurement

1. Supplier relationship management

Interacting with suppliers on a regular basis, procurement teams that are becoming more digital need to ensure that they digitise their most valued relationships. Having manual processes for onboarding and interacting with suppliers is a costly process that can lead to errors. 

“Once procurement teams have identified their preferred suppliers, their objective should be to spend 80% of their total spend with them. Focusing on preferred suppliers allows organisations to unlock a number of benefits including pricing discounts and quicker ordering and invoicing,” commented SoftCo.

Onboarding can also be done via web forms instead of paper methods and manual data processing. “Interacting with suppliers can and should be done within a single platform where dialogue can be tracked as opposed to a chaotic fashion involving phone calls and email attachments for requisitions,” added SoftCo. 

Updating procurement processes can save time and reduce the potential for data inaccuracies.

2. Automation of time-consuming tasks 

It is clear to see the impact that technology has had, not just in procurement but across many business functions. According to Levvel Research, 39% of companies are using eProcurement solutions to place orders with suppliers. Leveraging this technology organisations are benefiting from improved control, visibility, and profitability. 

“eProcurement solutions allow non-procurement staff to easily select a product or service, create a requisition, and send it for approval. The process of creating requisitions is made quicker and more efficient,” explained SoftCo.

The company added: “Easily configurable workflows can be implemented to ensure that any spend is allocated to the correct cost centre, geography, and general ledger. Approval workflows can also be configured to ensure that each requisition is approved by the correct people before a PO is created.”

3. Compliant purchasing processes

During the procurement process, it can be all too easy for an employee to accidentally break company buying guidelines without their knowledge. 

“Best in class organisations have systems in place where a user can choose products and services from only preferred suppliers, automatically create a requisition with the correct product details which allocate costs to the correct cost centre and GL. Approval workflows can be used to ensure that the correct people approve the requisition before a purchase order is created,” explained SoftCo.

4. Total cost management

With procurement being responsible for overall company send, traditional, manual processes makes it difficult to gain visibility into this function. 

Best-in-class procurement teams are investing in procurement processes that improve reporting and analytics.

“Procurement teams that have full procurement visibility can pull real-time data on KPIs such as spend per employee, cost centre, or department, as well as time to process POs,” said SoftCo.

This allows procurement leaders to spot any inefficiencies and identify potential areas for improvement and development. SoftCo also recognised that “organisations that add a formal purchase order process to their non-trade spend typically reduce spend by around 3%.”

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