How to Automate Procurement?
The cost of purchased goods and the cost of managing the procurement process directly affect the margins and profitability of the business and that's why the procurement management process plays an important role for each company.
Automation of the procurement management process allows businesses to reduce operating costs, improve relationships with suppliers and make the company more profitable.
In order to automate any process, it is really important to have a vision of how it should look in future. A special attention should be paid to main stages and participants.
Why it’s necessary automate procurement and how to do this.
The main reasons why it's worth to automate the procurement process:
At the end of the month, you have numerous expenditure reports from a large number of people and from different sources, such as mail, tables, Google doc. Without this work done, it is impossible to calculate the profit or loss. And the time is really important.
You can avoid situations when the supplier misunderstands you and delivers wrong goods, goods in a different quantity or not in time.
It helps in the situations when you need to precisely know your expenditures for a certain period. Otherwise you, can't do this, because firstly you need to ask someone, look at dozens of tables or review a pile of papers.
Automation could be a helping hand to avoid disrupted deals with customers because of late delivery from the supplier.
Advantages of the automated process:
Procurement management involves participation of fewer people. The approval process is carried out automatically without collecting signatures on paper
You can always review the procurement history for any period and find out all necessary details: about prices, suppliers, who carried out the procurement process, when it was done and who approved the purchase.
The company carries fewer risks because of the fact that most Purchase Orders are created in cooperation with suppliers who have already had a signed contract and an approved price.
Goods are delivered only after receiving orders. It eliminates unnecessary residuals in the warehouse.
When paying you can see all documents related to the purchase: a procurement request, a completed and approved order, a contract with the supplier and the terms of work.
5 main steps to automate the procurement process:
1. Choose a solution which will allow you to adjust the procurement management process within the same interface
2. Add the main elements involved in the process: the list of suppliers, signed contracts, a catalogue of goods with fixed prices. Make the search of goods in the catalogue easy-to-use. It could be done using product categories.
3. Provide access to your employees to the procurement management system. If necessary, you can limit their access to the catalogue. Divide all employees according to their departments / offices / locations.
4. Rules must be set in each section for better interaction of employees. In the frameworks of this step classify employee roles, adjust an approval hierarchy, add company budgets, limit access to changes.
5. Control the process with the help of approvals and budgets, monitor analytics and reports
After completing 5 simple steps you will be able to get the latest information on your purchases:
1. Who makes purchases and what is bought?
2. What amount of money is spent now?
3. How much is left in the budget?
4. How much was spent by a certain department / division / employee?
5. What happens to procurement: which of the orders are fulfilled, and which ones are waiting for delivery?
How many current contracts with suppliers are there nowadays and which of them need to be extended or re-signed?
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