According to more than half of Procurement leaders, a colossal problem must be addressed with the inefficient use of automation software for procurement processes. Time-consuming and error-prone manual workflows slow down the procurement process.
Therefore, a majority of procurement professionals are considering switching to digital processes to optimize procurement. You can reduce labor costs and accelerate procurement by digitizing and automating your processes. Check out these simple steps to automate procurement, along with why you need procurement automation software, to begin with.
Are you ready to move forward? Read on!
Procurement Process Automation
Paper-based, email-driven, or phone-based procurement processes are impractical and time-consuming. That’s why automation is a perfect fit for them.
Cost-containment, efficiency improvement, and productivity are benefits of procurement process automation. In this strategy, technology is used (via procurement software) throughout the lifecycle of the procurement process, spanning sourcing to supplier relationship management (SRM).
Automating procurement has numerous benefits.
The procurement department’s focus is on maintaining relationships with suppliers as well as making good purchases. That needs a perfect balance. Procurement automation offers the following benefits:
1. Increased transparency of spending
Data quality is improved by procurement automation. Procurement software accurately represents purchases, contracts, order history, and supplier quotations. You can then make data-driven purchases based on this information. A better understanding of your spending also allows you to identify gaps, streamline managing it, and reduce costs in the long run.
2. Streamlining the approval process
It is common for purchase requests to become stalled in the approval process due to the hierarchical structure of organizations. The ordering cycle time can be shortened by automating the flow. Expenses are also reduced by eliminating redundant processes, allowing your team to be more productive.
3. Managing contracts is made easier
Multi-supplier collaboration is common among organizations. Contract databases make onboarding new suppliers and ensuring compliance easier. The procurement automation software mitigates errors by providing standard contract templates.
4. Enhanced relationships with suppliers
Long-term supplier relationships require transparency. Real-time communication is made more accessible by automation. Due to the public nature of the process, it allows suppliers to be evaluated more effectively; savings can be achieved, thus establishing trust between the buyer and supplier.
5. Productivity boosted
Your team can focus on strategic work when your procurement processes are automated. As a result, decision-making is facilitated, efficiency is increased, and errors are eliminated.
When to use procurement automation?
Procurement professionals face several challenges, some of which are as follows:
- The internal stakeholder community has many demands;
- A large number of request for quotes and proposals;
- Profitability issues;
- A rise in costs;
In most cases, these problems arise because the right tools are not used. These challenges can be easily eliminated through procurement process automation. You can automate the following processes immediately:
Invoice approval: manual procurement delays payments, so you miss early payment discounts; automation allows invoices to be paid quickly and easily.
Vendor sourcing: Software can simplify supplier selection.
Contract approval: Procurement tools make it easier to access contracts by organizing them in a central repository.
Purchase requests: automating approvals can save time and simplify the process.
Procurement’s future: a glimpse
There are many inaccuracies and bottlenecks associated with traditional, manual procurement processes. All these problems can be solved with e-procurement, which digitalizes procurement processes and brings them into the modern era.
However, this doesn’t end here. AI and robotic process automation (RPA) can further automate procurement. It is possible to fully automate low-value and repetitive tasks using RPA with no human intervention, allowing for greater speed and accuracy. Indeed, there’s more to come in procurement automation.