It can be stressful at first to try to improve your procurement process, but it doesn't have to be challenging. Discover the three best practices to supercharge your process!
The procurement process has many moving parts, and at first, it can be overwhelming to try and find ways to improve it.
But it doesn’t have to be.
Simplifying your procurement process has never been easier, thanks to various software solutions that map and visualize the efficiency of your organization’s current processes of purchasing tools.
An efficient procurement process helps save your organization time and money and ensures you get the right solution to meet your needs.
To ensure that your strategy is as seamless as possible, we cover three best practices to help you supercharge it:
Automation not only improves the efficiency and productivity of your procurement process but also saves you time and money. The more traditional purchasing process (such as paper-based spreadsheets, emails, and phone calls) are inefficient and time-consuming.
Procurement automation connects different systems, giving you real-time data insights. You’ll have a clearer understanding of your organization’s spend and budget, making inventory management and supplier performance evaluation easier.
Automating your process also allows you to place purchase orders faster, reducing the ordering cycle time. By eliminating redundant tasks, your team can focus on other tasks that bring value to your organization.
With that in mind, here’s how you can use automation to improve your procurement process efficiency:
According to Raconteur, 60 percent of business leaders believe that looking into their current procurement processes before investing in transformation would give them the clarity to migrate to digital solutions more successfully.
Despite this, 82 percent of them miss this stage in procurement strategy entirely.
To work out where you can improve efficiency through automation, you need to map out your current procurement process and its steps. Doing this will help you to see where you can automate any repeatable tasks. There are two ways you can map your procurement processes out:
Before automating these bottlenecks and repeatable tasks, you need to digitize them within your procurement function.
Look where you can switch from manual to digital processing in your procurement process. For example, you can convert all manual purchase request forms and orders to dynamic digital formats. The easiest way is to convert your paper documents to PDFs through tools such as Adobe Acrobat or PDFFiller.
Not only does this transition enable you to access forms online and store digital copies, it also means you can link forms to your existing databases to auto-populate and auto-validate data.
When it comes to approvals, digitizing forms and implementing e-signatures means documentation can be approved remotely. You should also switch to digital invoicing and purchase orders, and look to move manual record-keeping to digital software. With automation software, you can automatically route forms and documentation to the next stage in the process and send them to approvers to e-sign.
Once you’ve mapped out all tasks in the procurement process and their respective owners on your team, you need to identify any bottlenecks, which often appear when time constraints affect your team (e.g., filling out forms or validating information).
In addition, look for bottlenecks that slow the process down or increase procurement costs. When doing so, consider the following questions:
Repeating tasks, such as data entry or manually sending paperwork to approvers can be automated.
The procurement process involves many moving parts: procurement orders, supplier details, budget management, and purchases.
If your organization heavily leans on the procurement team, you need more tools to ensure this part of the supply chain process runs smoothly. Evaluating and onboarding the right procurement system is essential.
After identifying your process’s bottlenecks and automation needs, it’s time to start strategic sourcing and decide which tools will help get the job done.
For example, if you need a SaaS management solution to streamline how you manage license renewals and control costs, your procurement team will know how to look for and demo those specific features. You might even be looking for machine-learning capabilities to take your automated processes to the next level.
Here are a few things to consider when trying to choose the right tools for your organization’s procurement process:
Procurement gets complicated when you want to include other stakeholders in the process. Your stakeholders don't have the same experience and procurement management knowledge as you do, and it's unlikely they'll opt to go through a tedious onboarding process.
You want a tool or platform to walk everyone through each purchase, in line with policy and without overcomplicating things.
Much like you want procurement software that helps you manage your contracts, it’s best when this software also enables you to manage vendors. It could be an internal database with prospective vendors to vet when a new need arises. Some solutions may also provide vendor portals where they can update their capacity and availability.
As your procurement department establishes essential processes, such as contract lifecycle management and purchase order management, you’ll want to ensure you onboard a scalable procurement software solution that grows alongside your company.
Key scalable features to look for are integrations, relevant use cases, and automated data entry tools.
These aren’t the only features to consider when choosing the right tools for an effective procurement process, as there are many more factors you should evaluate.
Like all processes, the more you iterate, the closer you get to maximum optimization. As technology evolves and your organization scales, what’s considered “optimal” will change.
For that reason, it’s best to consistently assess, measure, and repeat your process. You’ll ensure you’re maximizing the value you get from your resources while minimizing unnecessary spending.
By developing a solid long-term relationship with your preferred supplier, you can realize better cost savings, supplier performance, and cash flow. A good supplier relationship also results in easier negotiation, better terms, and more contractual flexibility.
The best way to take advantage of these benefits is to start improving your sourcing strategy and building solid relationships with a handful of highly-qualified approved suppliers.
A great business relationship is more than just transactional. Your strategic procurement team should be committed to high-quality suppliers, treating them as valuable partners.
Here are a few ways for procurement professionals to build great relationships with your suppliers:
Establishing a shortlist, or consolidating your existing list of suppliers, often results in more business with them. As a result of this strategic sourcing process, you increase the communication between parties and create more financial incentives to help you reach your contract objectives.
Limiting your supplier pool also reduces the amount of time for the procurement team to conduct due diligence and new vendor evaluation. It also saves time and money while mitigating supplier risk automatically.
Here’s how you can identify your key suppliers to begin implementing your supplier strategy:
While everything the company orders is important, not everything has the same impact. Treating all supplier relationships as the same would be a huge mistake. We recommend that you break down your existing supplier base into five distinct categories, outlined by David F. Pyke in “Strategies for Global Sourcing.”
It’s time to develop your supplier strategy now that you’ve segmented your suppliers. You’ll establish goals, objectives, and expectations for each segment and use KPIs to track them. You will also have to ensure that resources are available for your suppliers and within your organization to meet these needs.
It’s finally time to put your strategy into action. Executing it may require collaboration and ongoing evaluation and feedback depending on where your supplier falls categorically.
Alongside your supplier strategy, it’s also essential to utilize your suppliers and include them in the conversation. Here are a couple of tips for interacting with your suppliers:
Don’t assume everything in your contracts is accurate. Use contract management best practices and look for discrepancies. Use these discrepancies to drive meaningful conversations with your supplier. If you find issues in your agreement, address these with your supplier and brainstorm solutions to avoid further problems.
When building long-term relationships, procurement managers must include your suppliers in meetings and celebrate their successes. During meetings, talk to your suppliers about how they have been helpful so far, how you expect them to consistently deliver even better, and communicate your vision with them.
Suppliers love being included and appreciated - just like the rest of us. Being enthusiastic will make them more productive and drive cost reduction.
The procurement process has multiple steps and requires attention to detail since it directly impacts an organization’s operational efficiency. The more refined it is, the easier it will be to fulfill purchases with minimal delays.
For that reason, Vendr helps modern procurement teams save time and focus on what matters the most. Features such as projected spending, stack overlap, and total spend analysis lead to faster and more practical decision-making.
The latest news, technologies, and resources from our team.
SaaS Stack Management
Learn what spend management looks like in practice, and discover five steps to take right now to make your spend management strategy more effective.