How to optimize the procurement process with software

 Purchasing software has a massive impact on an organization's bottom line. Manual inefficiencies cause organizations to spend a significant amount of cash on long purchase cycles, missed discounts and transaction disputes. Trying to speed up buying processes with old tools like spreadsheets and email is like trying to run on the ocean.

What is procurement?

A great way to do this is by automating your procurement process with purchasing software. It comes with many benefits. Modern buying tools can turn a long taking slow buying strategy into a world-class one overnight.

Procurement refers to the practices, structured methods and tools that are used to streamline an organization's procurement process and achieve desired results while saving costs, reducing time and building healthy supplier relationships. Procurement can be direct, indirect, reactive or proactive.

Difference between indirect, direct and services procurement?

Direct, indirect and services procurement are subsidiaries of the wider procurement process and differ in aspects like definition, assignment, etc. By taking an in-depth look at the differences between these processes and understanding what is involved, it will be easier for the entrepreneur to take appropriate measures to meet the requirement.

Direct Procurement

• Purchase of goods, materials and or services for manufacturing intent. Examples: Raw Materials, Machinery and Resale Items

• Promotes sustained growth in external profits and revenues

• collection of stock materials or parts for production

• Establish long-term, cooperative supplier relationships

Indirect Procurement

• Sourcing and purchasing of materials, goods or services for internal use. Examples: Utilities, Facility Management, and Travel

• Takes care of day to day tasks

• Used to buy consumables and perishables

• Recourse to short-term, transactional relationships with suppliers

Services Procurement

• Procurement and management of contingency workforce and consulting services. Examples: business services, software subscriptions, etc.

• Used to plug gaps in the process and people

• Used to purchase external services and employees

• Maintain one-off, contractual relationships with suppliers

What Is a Procurement Process?

The procurement process includes the preparation and processing of a demand as well as the final receipt and acceptance of payment. Broadly, this may include procurement planning, determination of standards, specifications, supplier research, selection, financing, price negotiation and inventory control.

Other than of specificity, every procurement management process has 3 Ps', namely process, people and paperwork. The threesome process of procurement is also known as procurement process flow. Those are briefly discussed below: 

Process: Well, the procurement agenda starts with preparation and processing of a demand to achieve the end result efficiently and effectively. The list of rules, guides, and array of procedures are carried further referred to as process and thereby defines the first P’s of the flow.

People: The entities involved in the procurement flow are known as people. These are stakeholders and they’ve specific responsibilities in the procurement cycle. Their objective is to take care of the initiation and finalization of the process.

Paperwork: The third P’s referred to the documentations involved in each stage of the procurement process flow. These paperwork help in giving boost to the next phase of the flow, however, these are collected and stored for reference and auditing reasons.

How to optimize your purchasing process with software?

A streamlined procurement process provides better control over every stage of the purchase process. 

The steps to follow to optimize your procurement process.

- Invest in good Purchase software

 

- Enable immediate employee hiring with training

- Define a clear buying strategy

- Set and plan the cost as per your budget

- Create an open communication channel with suppliers

- Integrate your buying processes with APIs

- Establish policy and procedure compliance

- Make monthly audit reports of your purchase

Conclusion

It is important for any organization to have a strong procurement process cycle, especially with a large number of suppliers and multiple departments involved in the process. The purchasing software is the tool that removes all the complexities of the buying process. 

The optimizing procurement process is a great way to ease your business workflow and get fast results. 

Looking for more information about procurement software, read our 5 best Procurement Software: Streamline Purchasing in 2022 blog.