Procurement Processes Every Company Must Automate
Procurement can be complicated. Between cultivating relationships with suppliers, keeping purchase orders and invoices organized, watching out for maverick spending, and more, there are a lot of elements that go into any company's procurement processes.
Because several people must sign off on various steps in a procurement workflow, bottlenecks can form easily. Maybe an email got lost in an inbox that is full, a purchase order fell behind someone’s desk, or your data entry processing times slow down drastically as your team gets buried in a high volume of invoices.
This is why procurement automation is an absolute must. By streamlining the parts of the procurement process that can be optimized with robotic process automation (RPA), team members can increase the speed and accuracy of their workflows.
The Procurement Process
Before a company can implement robotic process automation in procurement, they have to know what parts of the process can be automated in the first place.
The aspects of the procurement process that rely on human action and interaction, such as approving requisitions or negotiating compensation can’t be automated. But the data entry and contract management workflows are prime targets for automation in procurement.
Components of the procurement process
Every company’s processes and workflows are unique, but in general, every procurement process has seven basic components.
- Identify a need: What goods or services do you require to do business?
- Consider suppliers: From whom can you get what you need for the best value?
- Negotiate Terms: What will you get, and what will you give in return?
- Finalize the order: Provide a purchase order detailing individual transactions and workflows with reference numbers for tracking and auditing.
- Process the payment: Upon receiving an invoice that matches the terms on the purchase order, you pay the agreed amount.
- Delivery and audit: Did you get everything you were supposed to get?
In order to implement automation into these components, you need to map out, in detail, every step your company makes to procure goods and services from vendors and partners.
Within these seven basic components are many different sub-components. Getting approvals, executing contracts, establishing relationships, and navigating the balance between loyalty to a vendor, and seeking the highest possible value for something your company needs are all necessary parts of procurement.
And at their core, those parts of the procurement process are not able to be automated. They rely on human beings to recognize needs and to communicate with each other. However, those tasks can be made simpler with automation.
Benefits of Procurement Automation
So how will procurement be automated? What procurement transformation benefits are so great that someone could comfortably write that every company should automate their procurement processes?
As previously stated, many parts of the procurement process cannot be automated, but the parts that can be automated should be automated—and here’s why:
Robotic process automation (RPA) takes processes that are rules-based, time-consuming, and repetitive out of human hands and speeds them up exponentially. These are tasks like data entry, where values are entered into specific fields.
RPA procurement examples
Some RPA procurement examples can be found in software that can autofill information on purchase orders or automatically collates purchase orders and invoices in cloud-based, secure storage — eliminating the risk of losing hard copies.
By integrating your automated procurement systems with your contract management software, you can also eliminate one of the most common bottlenecks in procurement workflows—lost emails and delays in approvals.
Setting the alerts
Automation allows for alerts to be sent to relevant figures within your company when their approval is needed without sending a separate email. And in the case of contracts that need to be signed by vendors, an automated system can grant necessary access to relevant parties, thus eliminating the need to mail hard copies back and forth.
Automated purchasing systems free your team members to focus on maintaining existing relationships with your partners and vendors and cultivating new ones. They will also have more time to look for potential volume discounts and other money-saving opportunities since they won’t have to dedicate hours upon hours of their work week to data entry and follow-up emails looking for approvals.
Monitoring Your Cash Flow
Another major benefit of automation is easy auditing. An automated procurement tracking system can flag invoices that don’t match up with purchase orders, whether because the invoice was a duplicate, the quantities are off between the two, or there appears to be maverick spending.
Since an automated system can track who did what in a particular purchase’s process, finding and correcting mistakes or tracking down team members using their purchasing privileges incorrectly becomes much simpler and takes far less time.
Finding costly errors
And again, notifications about potential inconsistencies can be made through your automated procurement systems so you won’t run the risk of an email getting lost in the shuffle.
Errors in procurement processes can result in double payments, late payments, or maverick payments that shouldn’t have been made in the first place.
Procurement automation makes those errors rare and makes them easy to recognize and deal with before your company’s bottom line is hurt.
Procurement Automation is Your Best Choice
When you look at the potential sources of bottlenecks in your procurement processes and see how automation can eliminate them, you’ll recognize the necessity of automation.
Stop asking, “what is an automated purchasing system?” Reach out to an expert to see how RPA can make your procurement processes, whether they are international procurement processes or domestic, more efficient and cost-effective.
Successful procurement teams recognize needs and take the steps within a company’s established workflows to see that those needs are met at the lowest cost and highest value possible.
In conclusion
Procurement automation allows those team members to focus on the company’s needs instead of entering figures into forms and collating pieces of paper.
This is to say nothing of how much easier automation makes it for your team to spot inconsistencies and track down the relevant documents to avoid costly problems.
The tools are here. They work and can save your company time and money by increasing efficiency, eliminating bottlenecks in your procurement workflows, and monitoring for errors automatically.
If you haven’t already taken steps to automate your procurement processes, you are falling behind. Take the necessary steps to improve your systems today.