Having an efficient procurement process is essential for just about any organization.
If your company is still managing its procurement through paper-based processes, there’s a good chance that your processes are both slow, and inefficient.
And this can be really costly. According to this article by TheManufacturer, UK businesses that use paper-based procurement processes lose up to 2 million pounds every year.
And that’s just the monetary loss. Having inefficient procurement processes makes your business less agile, which tends to hurt your growth overall.
So, how can you make your procurement process more efficient? In this guide, we’re going to teach you everything you need to know:
- What’s the procurement process and why is it so important
- Why you have to automate your procurement processes
- How to automate procurement with software
- How to pick the right procurement automation software
But first, let’s start with the basics…
What is Procurement?
Procurement is the process of finding, agreeing to terms, and acquiring goods or services from an outside organization.
The process often involves tendering or competitive bidding.
What’s a Procurement Process?
The procurement process is a series of steps your organization needs to carry out in order to procure certain goods and services.
Procurement Process Steps
For most organizations, a procurement process usually involves the following steps:
- Identify the need for a product or service.
- Purchase requisition. A company employee submits a request to the purchasing office.
- Request review. The purchasing office reviews the purchase request and approves it. or disapproves it. Approved requests become POs (Purchase Orders).
- The Purchase Order is forwarded to the finance department for budget approval.
- Requesting quotation. The procurement team reaches out to potential vendors and asks for a quote.
- Purchasing negotiates with the vendors and comes to an agreement with one of them.
- The vendor delivers the goods and services.
- Three-way matching is conducted. The Purchase Order, packaging slips, and invoices from the vendor are matched to see if there are any discrepancies.
- If there are no issues found during the three-way matching, the invoice is forwarded to finance to make the payment.
- Once the payment is made, finance makes a record of the transaction.
As you can see, the procurement process involves at least 2 or 3 different departments and requires everyone to coordinate work.
Unfortunately, however, most organizations use a paper-based procurement method.
What this means is, the procurement is done through emails and paperwork – your employees manually fill in physical forms, scan them, send them to the relevant party, rinse, repeat.
At scale, this makes the procurement process extremely inefficient. You always have over a dozen of these processes happening concurrently, and the moment someone misses an email, a purchasing order can end up being delayed for weeks.
In order to make your procurement process as efficient as it can be, you need to use the right automation solution.
How (And Why) To Automate Your Procurement Process
Using the right procurement automation software can significantly improve your procurement processes.
Procurement software allows you to:
Take all your forms online. No more meaningless paperwork (and scanning)
Automate your processes. All you have to do is set up the standard procurement process once, and then for every time someone wants to procure something, they just need to launch it.
From then on, the software handles most of the execution. Remember the procurement process example we gave you above? Here’s how the same process is executed through software…
- Employee goes on the procurement automation platform and fills in a procurement form.
- The software automatically launches the procurement process and assigns someone from the purchasing office to review the request (with a set deadline).
- If the purchasing office takes too long, the software will ping them on a regular basis to review the request.
- If the request is denied, the purchasing office fills in a reason, and the requester gets a notification with the feedback.
- If it’s accepted, the software automatically routes the request to the finance department and sets a deadline for the approval.
- If the approval is given, the procurement team is given a task to reach out to vendors.
- Once an agreement is made and goods are delivered, the three-way matching is done through the procurement software. The finance team can see all 3 documents in one place and can give approval through there.
- The software assigns the finance team the task to approve the payment and creates a record in the relevant database, finally completing the process.
See the difference? The software does a big chunk of the work, leaving your team more time to work on more important tasks.
Other than the automation part, the software also yields several other benefits, including:
- Eliminates chaos. No more “wait, so who was in charge of what?”
- Speeds up your procurement significantly
- Allows you to see how all procurement processes are performing from a top-down view
- Reduces the likelihood of your employees making mistakes
- Keeps the process standardized
How to Use Blissfully to Automate Your Procurement
Sold on procurement software?
Here’s how you can get started with it.
First, you need to pick the right solution. We’d recommend going with Blissfully: as a start, it has all the essential features for procurement software, but on top of that, it also enables you to:
- Automate most of your other processes, including employee onboarding, employee offboarding, approval processes, and more.
- Manage all your SaaS subscriptions in one place. If you’re using a dozen or more SaaS tools to manage your business, this feature is a god-send. You’ll know how much you’re spending on each at a glance
Once you’ve picked the right software solution, you need to create a procurement process. With Blissfully, this step is super straightforward:
All you need to do is head over to our Workflow Gallery…
And pick the right template:
Now, all you have to do is:
- Customize the procurement process for your business
- Onboard the rest of your team to the software
And you’re good to go!
So, suffice to say, if your business is serious about its procurement processes, it’s essential to use the right automation tool.
Whether you’re an SMB or an enterprise, procurement software can help you:
- Automate your procurement processes
- Streamline your procurement operations
- See what’s going on with all concurrent processes through a single dashboard
- Ditch all the emails and paperwork
And, overall, save a lot of money.
So, ready to get started? Register for Blissfully here.