Procurement is a core component of every small business. From sourcing to acquiring and maintaining supplier relationships, it is an integral part of any organization.
But choosing the best procurement software for small businesses can be a challenge. Given the variety of alternatives available, it takes a holistic approach towards purchasing procurement software to make the best choice possible. First, you need to identify the procurement challenges you’re looking to solve, define which parameters to improve, and carefully analyze each option on your buying list to determine which one best solves your pain points.
This article will serve as a handy guide to understanding your small business procurement challenges and choosing the best procurement software for small business possible.
The challenges with manual procurement operations
Procurement is a diverse field where different challenges can crop up, depending on the industries you serve, what your internal operations look like, and what solutions you’re currently using. Below are some of the procurement challenges that small businesses often face.
1. Finding the status of action items is impossible
Before investing in dedicated procurement software, most small businesses often use spreadsheets and emails for managing their procurement processes.
Typically, when employees create action items, (say, create a purchase requisition) it’s entered into a huge backlog—say, a huge spreadsheet where past items are stored.
This creates a situation where you have a hard time figuring out where action items fall into exactly. Without a dedicated tool for tagging action items, such a small issue gets in the way. Now, you have to manually check with employees or keep a mental record of which items are in the to-do, in-progress, and done stages. This overtime becomes almost impossible to do!
2. Communication gap
Of course, employees can send emails to the procurement lead, explaining which items on that spreadsheet are the new requests they made today and after a few back-and-forth sequences, you can have some clarity.
And for every small clarification you need, you hop right into email, go back and forth a few more times and then settle on a solution.
Manual procurement operations slow down communication and as a result, slows the procurement process.
3. Approval delays
When action items are processed manually, they’ll inevitably slow down approvals as employees and controllers go back and forth trying to get a clear picture of where they’re at before proceeding.
4. Maverick spend
Manual procurement operations often lack central direction and as a result, it’s easy for employees to make purchases outside existing contracts. The incidence of maverick spending cuts into your procurement budget and might endanger your internal operations with non-standardized supplies.
5. Time-consuming purchasing cycle
What do you get when everyone involved in the procurement process is going back-and-forth over email, spending hours trying to figure out the data jumbled into spreadsheets, and controllers are spending hours approving tasks that could take seconds?
The entire process eventually slows to a crawl. Manual procurement operations get you and your employees stuck with tasks that could be easily automated, wasting time that should have gone to more productive efforts.
6. Security issues
Procurement is a key part of your financial operations since it’s tied to the flow of cash out of your business. Along the line, you’ll have some sensitive data like bank accounts, credit card details, etc. appear in your procurement process.
Do you think an Excel spreadsheet can keep all that information safe?
Tools like Excel create a security risk since they are not built for managing procurement operations. They are not designed to help keep your data safe and as a result, your operations are easier to compromise.
Define the requirements (User, Features, Growth & Budget)
With a better understanding of the problems inherent with manual procurement operations, next up, we need to define what parameters you’re looking to accommodate with a procurement software solution.
In other words, what type of solution do you need? And to answer that question, you need to define the solution you want out of it.
As you grow, you have new challenges to face in terms of communication, automation, and processes. You might even be using some sort of procurement software at the moment, but it’s easy to outgrow a solution without knowing when you’re not attentive to your company’s procurement needs.
Communication capabilities, automated processes, file sharing, task management, procure-to-pay, three-way matching, vendor management, integration with your existing tool stack, API access, etc., are some of the features your organization might need to streamline your procurement operations. The ideal procurement software for your small business should be one equipped with solutions that solve all these pain points as efficiently as possible.
Now, you may be shopping for a procurement solution that’ll suit your limited budget, but it’s not advisable to undercut so low that you end up buying cheap, ineffective software that no one eventually uses.
The right question to ask is to ask: what value does a procurement software need to offer my small business, and how much will that value be directly worth to me?
Approaching from a value angle empowers you to tailor your budget appropriately to fit your needs, going neither too high nor too low and still getting what you want.
Ask questions and find answers about the procurement software market
Now, we know the problems associated with manual procurement and how procurement software should fit your company’s needs to be worth it.
Finally, you have to get down to the individual level to evaluate every option available to your organization. These questions below can help
Does it cover the entire procure-to-pay cycle?
The procure-to-pay cycle covers every interaction made from when you contact potential suppliers until supplies are delivered to your organization payment is made for the purchase.
If you’re shopping for a comprehensive solution that packages your procurement neatly, a software solution designed to run a procure-to-pay cycle will serve as an all-in-one solution to your procurement needs.
Does it support your preferred platform (cloud, on-premise, or hybrid)?
Depending on the direction your business is headed, you might want to either base your procurement software on-premise, host it on the cloud, or opt for a mix of both.
Your preferred procurement software should enable you to go in the direction that supports your strategic goals.
How many users will it cover?
Your procurement needs will be largely determined by the number of users you’re looking to carry along within your organization. And while choosing a procurement software, factor in the need for future growth to accommodate a growing headcount.
Does it fit within the budget?
The budget question boils down to: how much value should procurement software offer my business? How much is that value worth to me in dollar terms?
If a procurement software saves you 30 hours a month you’d have spent manually wrangling data in spreadsheets, and you channel that time to make an extra $62,000 every month it makes every sense to invest at least a few hundred dollars into such a tool. Look at ROI and not just surface cost to make your decision.
Does it integrate with other solutions? Check for compatibility and integration with existing third-party tools
You already have a toolkit of software you use to run your business.
Ideally, your new procurement software should integrate with those so you can move data seamlessly and automate previously manual tasks across your stack using APIs and webhooks.
This creates a network effect where one tool unlocks so much potential to automate even more tasks beyond procurement and build more efficient business operations.
How will the implementation and updates work? How much training does it require? What kind of maintenance support will you get?
Whatever procurement software you’re opting for should have a reasonable learning curve so you can get your team and your existing procurement data onboarded as quickly as possible to minimize disruptions to your procurement operations in the time in-between.
Why you should choose Kissflow?
Kissflow Procurement Cloud is designed as the all-in-one procurement solution for small businesses looking to:
- Automate workflows and minimize manual input
- Save time spent on manual tasks
- Scale headcount and procurement operations without needing to switch to a new software every six months, and
- Minimize maverick spending and bring spending under management
Kissflow Procurement Cloud is built out with modern features designed to empower small businesses to transform procurement operations, unlock value, and save time—
- Powerful workflows and processes
- Efficient communication & collaboration via chat, comments, and @mentions
- Three-way matching to eliminate billing fraud
- Dynamic product catalogs that streamline the procurement process
- A cloud-based platform that gives your entire team real-time access to the latest data
Kissflow Procurement Cloud solves the procurement headaches of your small business so you can focus on serving customers better. Request for a free demo now to learn more!