December 19th, 2018 • Procurement Process
Chaotic procurement management is a way of life for too many organizations. Changes within an organization’s approach towards procurement allow chaos to flourish and blossom. The major reason behind this lurking menace is the manual and paper-intensive procurement practices followed by organizations.
Manual procurement management is filled with high processing costs, lost or misplaced documents, sluggish approval cycles, missed discounts, and uncontrolled costs. Additionally, the supplier relationships take a hit due to late payments, poor vendor management, inefficient dispute resolutions, and more.
All these factors make an already messy procurement management process even messier. Relying on manual tools will create an inadequate, non-uniform procurement process that causes leakage of revenue, missed opportunities for savings and growth, or worse, outright theft.
To prevent the ubiquitous loss of money, effort, and control, organizations need to integrate all procurement functions, control spend, track purchases, and create an environment that enables growth. Here are five ways you can crush the lurking dark menace called chaotic procurement and instill a sense of efficiency in the procurement process.
Procurement Management is the strategic approach to managing and optimizing organizational spend. It involves acquiring quality goods and services from preferred vendors within a stipulated budget, on or before the deadline. The procurement management process includes sourcing, requisitioning, ordering, expediting, inspection, and reconciliation.
The procure-to-pay process is the most time-consuming, labor-intensive, and paper-driven function in an organization. The move towards an automated procurement management process is long overdue.
Here are six important reasons why businesses need to automate their procurement management process:
Though there are a number of functions in procurement, here are the top 5 functions that need to be automated to save time, manual effort and cost.
A purchase requisition system offers requesters a guided requisitioning experience. Right from listing preferences or frequent purchases to suggesting the best vendor, it embeds purchasing policy in the process and guides the requester in the right way.
As policies are enforced real-time and any missing or misleading information in the purchase requisitions are spotted instantly, there is no room for errors or inaccuracy in purchase requests. A procurement management software that offers electronic data capture, routing and approvals will help organizations keep the requisitioning experience consistent every time.
With a procurement management software, there is no need for manual paper-based purchase orders or data re-entry. Purchase requisitions are automatically converted to as many purchase orders as required (depending on the number of line items).
Since purchase order software offers complete transparency into the process, stakeholders can easily find out where a PO is located in the purchase order approval chain at a specific point of time. A procurement management system will ensure that purchase orders list out every important detail a stakeholder needs to take an effective decision and process the PO swiftly.
Invoice approval and processing is a prominent procurement process that can be made more efficient, and more accurate with the help of procurement automation. Whenever a vendor submits an invoice, the procurement management solution will process the paper invoice, digitize it, and cross-check it with available information like supplier name, PO limit, and contract payouts.
In case of discrepancies, the invoice approval system will prevent the invoice from being paid and decide what to do based on the predefined rules. If everything is in order, the procurement management system will automatically forward the invoice to desired human operator for approval and final payout.
The vendor management and selection process is often manual, repetitive, and lengthy. A procurement management solution can automate several tasks in this process like background checks, supplier RFQ review, and follow up in case of missing information or documents.
Automated vendor management systems can enhance supplier collaboration by performing all steps in vendor onboarding with increased accuracy and timeliness. Additionally, a procurement management software can perform due diligence across a number of stages—processing, reviewing, and scoring of vendors—in a fraction of the time it would take manually.
Manual contract approvals take forever to process. Generally, contract management involves collecting and managing contracts across the organization and storing them in a secure location.
A procurement system will review these contracts, compare them against pre-defined templates, and point out fluctuations in terms and conditions. Automated contract management systems can monitor contracts over time to spot non fulfillment of terms, contract expiration, and other issues that could lead to a dispute if left unnoticed.
Although organizations can derive a lot of value by identifying the reason behind procurement management and regulating it, most organizations keeping pushing it back as they have no clue where to start.
Here are five major aspects that procurement teams can digitize to improve the efficiency of their procurement process:
Purchase orders, purchase requisitions, and invoices that need approval are routed digitally based on a pre-defined list of rules. Rules should be flexible enough to accommodate a number of workflow patterns (serial, parallel, ad-hoc, etc.) based on elements such as total value, organizational structure, vacations, and more.
Upon receiving an invoice, the automated procurement management system should check for duplicate entries, validate data, and identify related documents (purchase orders, order receipts, etc.). Data should be validated against business rules and policies to ensure compliance. All exceptions need to be forwarded automatically to respective stakeholders for inspection.
An automated procure-to-pay process should eliminate potential bottlenecks and delays in the procurement process by sending event or task-based notifications. Alerts should be configured in such a way that they move tasks along the process flow from onset to completion without any need for manual follow up.
An automated procurement management system integrates seamlessly with downstream systems of records like business process management (BPM) tools, contract management systems (CMS), general ledger (GL) platforms, and eliminates the need to rekey and update information manually.
Storing contracts, vendor information, and other purchasing documents digitally eliminates the need to maintain an expensive and inefficient physical repository. Online forms and digital workflows allow organizations to access the complete processing history of each document with fool-proof audit trails.
KiSSFLOW allows organizations to automate their process management process in four simple steps:
Choose one from the 50+ ready-to-use app templates from a purchase order template to invoice approval. Define digital forms, workflows, and permissions to tailor it to your needs. You may also create a brand-new procurement app from scratch.
Use a drag-and-drop form builder to modify fields, conditions, workflows, and more without much trouble. You can create auto-populated fields, add tables, connect your digital form to a master database, and more.
Enforce accountability by delegating responsibilities for each task. Specify the stakeholder who can approve requests and modify tasks. You can also make specific fields read-only or hidden based on specific conditions.
Publish the app org-wide, test it, and make any required changes. Once the app is published, you can keep track of all expenditures (both direct and indirect spend) in real-time. You can create ad-hoc reports, export data, and analyze spend culture with the built-in reporting module.
To prevent the ubiquitous loss of money, time, and effort that occurs as a result of manual procurement processes, organizations need to step towards control and visibility. An automated procurement management process can streamline, accelerate, and track every step of the procure-to-pay process all the way through payments.
Procurement management using tools like KiSSFLOW will not only make the process efficient but also help organizations maintain and build better vendor relationships. KiSSFLOW offers businesses the flexibility to tailor a procurement app that is in tune with their existing processes and potential growth.
KiSSFLOW combines automated workflow processing, seamless integration, and effortless reporting to automate the procurement management process and offer businesses with substantial operational and financial benefits.
Take back control of your procurement management process with KiSSFLOW today.
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