Do any of these scenarios sound familiar?
- A delivery arrives, along with a packing slip and an invoice. But, someone misplaces the original purchase order.
- A delivery arrives. Accounting receive the PO, packing slip, and invoice. But, unfortunately, the department placing the order does not have enough left in its budget to make that payment.
- A past-due invoice shows up in accounting. But accounting has no other paperwork on the order and must spend an hour or so tracking down who ordered it, and where that other paperwork is.
These are the common issues that rear their ugly heads when companies that have grown in size have not improved their procurement procedures. New flash: It no longer works. It’s definitely time to consider the move to IT procurement software.
Under a Traditional System, Here is What Happens
Procurement is the method by which people in organization purchase the products or services their departments of functions need to keep operating. These can be things as small as copier paper and toner to large items, such as a new piece of equipment. The process goes something like this:
- The purchaser determines the need. If the supplier has been used before, the process is a bit simpler. The purchaser completes a purchase requisition and sends it for approval. A supervisor secures that approval to ensure that the budget will allow the purchase.
- Once approved, the purchaser completes a purchase order and sends it over to the supplier – often via email or fax, hopefully not through snail mail.
- There are company policies related to getting quotes if this is a new purchase. Usually from three potential suppliers if the item is a high-ticket one. The purchaser then waits for quotes to return, makes a selection, and sends a purchase request for approval with the quotes stapled onto it. When approved, the item is ordered.
- When the order arrives, it is then checked for accuracy. An invoice may also accompany that delivery or it may be sent separately. Confirmation of delivery and the invoice must then be sent to accounting for payment.
This is a manual process. Consequently, time is lost and paperwork is misplaced. It’s just antiquated and inefficient.
Companies experiencing this cumbersome process need to make the digital transformation to e-procurement software.
What to Look for in E-Procurement Software
Every organization has its unique needs for procurement management software, however, some software solutions are better than others. And there are some basics that all companies need. There should be no compromise when it comes to these basics:
1. A User-Friendly Interface
Training end-users should be a relatively easy process that takes little time. It’s frustrating to struggle with navigation. If someone continually asks for help, the company loses time. Forms should be easily fillable, and sending them to all involved parties should require no more than a click.
2. Real-Time “Conversation”
This means that there are seamless integrations in real-time. Program PO automation into the software itself. If all of that automation is correct, no one will ever have to ponder about where a purchase requisition, PO, or invoice ought to go. Be sure to remain within budget at all times and charge procurement expenditures to that department automatically. This prevents rogue spending because no one will be able to exceed his/her budget.
3. Speed and Flexibility
While there are bugs to work out during the set-up process (remember, every organization is unique), that setup should not take months to accomplish. Once you make the decision for this digital transformation, procurement software services should ideally be deployed within a month, with all of the flexibility that your organization’s unique needs demand.
4. Automated Approval Workflow
Part of the issue with old manual systems is that approval has been dependent upon humans looking at paperwork as they can get to it. If the parameters are built into the procurement software services (e.g., spending or budget limitations by individual or department), then approval should be automated, without the need for human intervention.
And the workflow from bid requests, to requisitions, to PO’s, to delivery confirmation, to invoice payments should all be automated as well.
All of these things reduce manpower and time and can result in significant savings over the long-term.
5. Budget Data
Everyone and every department involved in procurement should have real-time access to their budget parameters. As long as they stay within those parameters, the workflow automation is in gear. If they should over-reach those parameters, there should be a system in place for re-routing a purchase request to the appropriate approvers with a justification for that request.
6. Mobile Access
Remote work is here. Even if you are not experiencing this currently, you will in the future. Prepare yourself. Any e-procurement software must have capacity for remote access on mobile devices by those who have permission-based access.
Benefits of E-Procurement Software
Just reviewing the five basics listed above should demonstrate the benefits of e-procurement software to your organization. In a nutshell, however, these include:
- A streamlined procurement process that reduces downtime at all stages of the process
- Save time and money
- Reduced errors and rogue spending
- Real-time and full transparency for all of those involved in the process
In the End…It’s All About Cost Savings
Calculating the quantitative cost savings of e-procurement adoption is sometimes difficult. However, a company can certainly begin to track the comparisons between the use of its software deployment with its older traditional system. The speed of procurement processes, the reduced need for human activity, and even the fact that certain positions can be combined and consolidated are things to quantify.
In the end, though, the case for adoption of e-procurement software is strong. It’s time to explore your options.
Pauline speaks Portuguese, English, Spanish and Italian and currently she works as a translator at translation service TheWordPoint. She travelled the world to immerse herself in the new cultures and learn languages. Today she is proud to be a voting member of the American Translators Association and an active participant of the Leadership Council of its Portuguese Language Division.