5 Procurement Automation Systems & Processes to Streamline Your Purchasing Workflows

For many organizations, procurement is a time-intensive undertaking.

Even a relatively straightforward software purchase can take weeks to implement, due to:

• Multiple approval layers
• Vendor risk analysis protocols
• Contract negotiation conversations

When you have a complex procurement process, team members for whom a SaaS purchase is vital are left waiting. So, the faster you complete procurement, the sooner they’ll benefit from the new tool you bring on board.

Procurement automation is a powerful solution to such a problem, creating more efficient procurement processes by eliminating manual work, speeding up approval workflows, and maximizing collaboration.

As an equally important benefit, procurement automation helps improve purchasing compliance and reduces financial risk during the buying process.

Learn how to automate your procurement procedures and discover the four most important business operations that benefit from implementing procurement automation.

What is procurement process automation?

Procurement process automation is an initiative that uses automation to streamline buying operations, minimize risk, and take advantage of advanced technology to eliminate the need for tedious manual work.

Automation tells the software platform, “When X happens, do Y.”

For example, in the context of contract approval workflows, a simple automation rule would be, “When someone generates a contract, send it to the legal team for review.”

Without automation, this remains a manual and time-consuming process. The procurement team member who generated the contract must draft an email to the legal team, attach the contract document, and remember to follow up if they don’t receive a reply.

Automating workflows might seem as if it would save only relatively insignificant amounts of time, but all those small manual tasks add up. Most workers report saving around six hours a week when repetitive tasks are automated.

Procurement automation identifies which tasks can be taken care of by automation rules, assesses any risks involved in doing so, and then implements the automation recipe in your given software platform.

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Why use procurement automation?

Create procurement efficiencies

The most apparent reason for using procurement automation is its inherent time savings.

Consider the example discussed above, where your company automates the contract approval workflow. Not only are you saving time on sending the contract over to the legal team, but you’re also benefiting from a faster workflow overall.

For instance, you can set another automation rule to remind the legal team to review the document if they haven’t approved it within three days.

Now, this process will happen without intervention. If the approval process remains manual, the procurement leader might take several more days to remember to follow up with their legal team, and so on.

Reduce manual errors

Automation eliminates manual errors that can occur during the procurement cycle.

Common examples of such errors include:

• Employees of the procurement department forgetting to follow processes accurately and sending contracts to the wrong people for approval
• Making simple data entry mistakes that can have huge consequences, such as adding an extra zero to a line item
• Procuring a new software system without checking with other departments to see if they already have one

Maintain compliance

Procurement automation ensures business processes are followed to the letter, helping you maintain compliance with internal regulations and reducing SaaS security risk.

You might, for example, build an automated checklist that requires procurement professionals to upload proof of having completed a GDPR (General Data Protection Regulation) compliance assessment before onboarding a new vendor.

Or, you may require all new software purchases be signed off by the CTO, using an automated approval workflow to ensure this happens every time.

Reduce approval bottlenecks

Getting proper authorization can be time-consuming, especially when multiple stakeholders must sign off on a new supplier relationship.

For example, you might set a rule in your procurement software platform to automatically route contract approval to another senior leader with decision-making authority if the first doesn’t sign off on the deal within a set timeframe.

Before implementing procurement automation, follow these steps

Procurement automation is a game-changer in today's fast-paced business environment, offering organizations the tools and insights needed to boost efficiency and drive success. By reducing manual processes, enhancing data analytics, improving supplier relationship management, ensuring compliance, and streamlining the procurement cycle, procurement automation can lead to significant cost savings and a more agile organization.

As businesses continue to evolve and adapt to the ever-changing landscape, procurement automation will play a critical role in their success. By investing in procurement automation software, tools, and processes, organizations can stay ahead of the competition and position themselves for long-term growth and profitability.

If you're considering implementing procurement automation within your organization, take the time to research and select the right tools and solutions that align with your unique business needs. The benefits of procurement automation are significant, and with the right approach, your organization can experience the transformational power of this technology. Embrace the future of procurement and witness the efficiency and cost savings that automation can bring to your organization.

1. Before implementing procurement automation, it's essential to conduct a thorough assessment of your organization's current procurement processes and identify areas where automation can have the most significant impact. This assessment will help you prioritize your automation initiatives and ensure that your investment in procurement technology delivers the desired results.
2. It's also crucial to involve key stakeholders, such as procurement professionals, IT staff, and senior management, in the decision-making process. By engaging these stakeholders early on, you can ensure that the procurement automation solution you choose aligns with your organization's goals and objectives, and that there's buy-in across the organization.
3. Finally, it's essential to plan for a smooth transition to procurement automation. This may involve providing training for procurement professionals on how to use the new tools effectively, as well as developing and implementing change management strategies to help your organization adapt to the new way of working.

How to automate your procurement processes

1. Map your existing procurement workflows

Start by analyzing the procurement workflows you have in place and mapping them out using a flowchart document like this:

It’s essential to get as detailed as possible so you can parse out the actions that you can automate. This mapping may involve creating separate workflows for each step in a larger workflow.

For example, the above flowchart documents a company’s procurement process as a whole, whereas the one below digs deeper into the steps involved in creating an RFP (request for proposal).

2. Consider which tasks can reasonably be automated

Next, analyze which of the tasks involved in a given workflow you could automate in your procurement system.

Consider the above RFP workflow. “Select evaluation committee” is a task that requires human input and thus can’t be automated.

However, some components of “Draft RFP” can be. Your automation software may be able to take an RFP template and fill in the necessary vendor information, such as company name and contact details.

Map out which automation rules could assign procurement functions to an automation rule and which must stay manual by necessity.

3. Perform an analysis of automation risks

Just because you can automate a task doesn’t mean you should. Some elements of the contract management process, such as pricing approval, should remain manual.

In this stage, work through each of the tasks you’ve identified that could be automated and analyze any risks involved.

Perhaps you identified that you could automate your invoicing processing. This automation results in time and cost savings, but it comes with inherent risks, such as the possibility of accepting and paying fraudulent invoices.

Analyze the risk profile of each automation against the potential benefit involved, and decide whether the risks outweigh the gains (in which case you should keep the activity manual).

4. Choose the software you’ll use to automate procurement

Depending on your current software stack, you might need to implement a specific tool to manage procurement automation.

Most teams will use a dedicated procurement management platform that helps manage the entire process, from sourcing to payment to contract renewal. The best of these tools have procurement automation built right in.

Learn more about the options available, and choose the right tool for your needs in our guide: Procurement management software: Shaping the future of procurement.

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5. Implement, test, and optimize

Now is the time to put your automation recipes into practice within your given platform.

A good approach is to break up the implementation of automation into chunks, where you roll out a limited number of new automation features and test that they work correctly before moving forward.

This will help you identify and squash any bugs and prevent data issues that might arise from setting up automation features incorrectly.

Four procurement processes you should automate

1. Purchase requisitions

A purchase requisition is a document your employees use internally to request a purchase. It outlines what they need to buy and from which vendor. It also discusses details like pricing and feature requirements.

Much information in a purchase requisition is filled in automatically (like vendor details), and the requisition approval process is also easy to automate.

2. Purchase orders

A purchase order form is an externally facing document, meaning it gets sent to your vendor as a formal acknowledgment of the goods or services you wish to procure.

The information in a purchase order is copied directly over from the purchase requisition form. You can set up an automated process that creates a purchase order form as soon as the requisition is approved.

3. Procurement approvals

The procurement approval process as a whole can be largely automated as well.

Rather than having to send emails or chase approvals with repeated phone calls manually, your procurement automation platform runs a sequence that looks like this:

• Procurement request created
• Head of procurement notified for approval
• Head of procurement approves request
• If the request is above a certain dollar value, request approval from C-suite
• Notification sent to CFO for approval
• CFO approves request
• Notification sent to the procurement team member that their request is approved

4. Invoice management

Many elements of invoice processing can be automated, particularly once you’ve established an ongoing relationship with a trusted vendor.

In most software agreements, for example, you receive the same invoice for the same amount each month. In this instance, automating the receipt, processing, payment, and storage of the invoice within a central repository is simple.

Automate procurement with Vendr

Vendr is the software buying platform that helps you automate parts of SaaS purchasing to speed up new software implementation and drive the approval process.

Get real-time updates on contract renewals and approvals, and negotiate better deals by taking advantage of the biggest data set of SaaS buying transactions.

Find out how much more cost-effective your vendor management process could be today with our free savings analysis.

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Procurement automation FAQs

In today’s fast-paced business environment, the need for efficient and effective procurement processes has never been more critical. As organizations look to optimize their operations, procurement automation emerges as a key solution, streamlining workflows and enhancing vendor management. Below, we address some of the most frequently asked questions about procurement automation.

How does procurement automation improve vendor management?

Procurement automation enhances vendor management by streamlining communication, ensuring compliance, and providing real-time data on vendor performance.  Automated systems can track vendor contracts, monitor delivery schedules, and ensure adherence to agreed terms, leading to improved relationships and more efficient operations.

What are the benefits of using procurement automation software for small businesses?

For small businesses, procurement automation software offers significant benefits such as cost savings, improved efficiency, and better compliance. These systems reduce the time and resources spent on manual procurement tasks, allowing small businesses to focus on strategic growth initiatives. Additionally, automated procurement helps in securing better pricing and terms through data-driven negotiations.

What are the benefits of procure-to-pay automation?

Procure-to-pay automation streamlines the entire procurement process from requisition to payment. Benefits include reduced cycle times, improved accuracy, enhanced compliance, and greater visibility into spending. Automation also minimizes errors and fraud, ensures timely payments, and improves supplier relationships through efficient invoice processing.

How is AI impacting the future of procurement?

AI is revolutionizing procurement by enhancing decision-making, predicting market trends, and automating repetitive tasks.  AI-driven procurement systems can analyze vast amounts of data to provide actionable insights, improve supplier selection, and optimize procurement strategies. This leads to smarter, faster, and more cost-effective procurement processes.

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