Is your company losing money because of inefficient procurement processes?

Manual procurement processes have always been a big pain for procurement professionals and business owners like you. That is why, in this blog, we aim to cover procurement automation to help you understand how it can help build more efficient processes for your business.

It’s time for your company to do away from manual labor and traditional procurement and finally leverage technology and procurement automation to shape your business. Let’s dive in!

What Is Procurement Automation?

Procurement automation refers to using technology and software to help you streamline and automate the procurement process in your business. This leads to transforming the internal finance process of your organization.

Procurement automation involves the automation of tasks and workflows within your procurement process, which involves action items such as:

• Supplier management
• Sourcing
• Contract management
• Purchase order processing
• Invoice processing
• Spend analysis
• Reporting

Why Should You Automate Your Procurement Process?

Procurement Automation helps reduce approval bottlenecks within your company. Instead of relying on manual processes and physical paperwork, automation software enables your company to streamline your approval process better. Aside from that, it also speeds up your entire procurement process, resulting in faster purchase requisition approvals and shorter cycle times.

Here are other reasons why you should automate you apply procurement process automation to your business:

• Increase productivity: Automating repetitive and time-consuming tasks in your business can help free up your procurement department to focus on more strategic activities like building relationships with your suppliers and negotiating better contracts with your vendors. Thus resulting in significant productivity gains.
• Eliminate manual errors: Procurement automation helps your business reduce human error. Aside from that, it also improves the accuracy of your procurement process. This leads to fewer mistakes and rework, as well as improved compliance within your business.
• Provide visibility into your spending: Procurement automation helps your organization access real-time visibility into your procurement spending and performance. This data can be used to make better-informed decisions to help you improve your overall procurement process.
• Improve collaboration between internal and external teams: Procurement automation improves collaboration between your internal and external teams by providing a central platform for sharing information and managing tasks. A cloud-based automation tool provides your business with a central repository for all procurement-related information, allowing for better visibility and transparency.
• Significant cost savings: By automating procurement functions, your organization can achieve significant cost savings. As you may already know, manual tasks are prone to errors that may lead your company to experience financial losses. Procurement automation helps reduce the risk of mistakes and eliminates the need for labor-intensive manual processes.
• Improve compliance: Procurement automation can help ensure your procurement processes comply with all applicable laws and regulations.
• Mitigate risk: Procurement automation can help you mitigate risks by providing visibility into your supply chain and automating tasks such as supplier risk assessments and contract management.

Top 5 Procurement Processes Your Company Should Automate 

Your company’s ability to streamline procurement will save your business time and money and enhance your organization’s overall productivity and competitiveness.

In this section, let’s explore the top 5 procurement processes your company should consider automating to stay ahead of the game against your competitors.

Purchase Requisition

A purchase requisition is your first step in the procurement process. It is a formal request made by an employee or a department in your company to procure goods or services. Automating this process in your company can help improve your efficiency and accuracy.

This is how you can do it:

• Centralized Requests: Implementing an automated system allows all purchase requisitions to be submitted through a single platform, ensuring consistency and eliminating paper-based inefficiencies.
• Workflow Automation: Automated workflows can route requisitions to the appropriate stakeholders for approval, reducing bottlenecks and speeding up the process within your company.
• Real-time Tracking: Automation provides real-time visibility into the status of your purchase requisitions, allowing for better tracking and accountability.

How To Automate the Purchase Requisition Process In ProcureDesk

Automating the purchase requisition process is the first crucial step toward enhanced efficiency in procurement. This process allows employees to request items they need to purchase and handles various payment tasks seamlessly.

Traditionally, this request undergoes a series of steps, from submission to approval, culminating in issuing a purchase order to the vendor. However, not every purchase requires a purchase order, especially when buying directly from a physical store.

The challenge with purchase requisition lies in its time-consuming nature. Employees often fill out lengthy forms online or on paper, followed by a back-and-forth exchange with the purchasing team to clarify their requirements.

ProcureDesk offers an elegant solution to this predicament by simplifying the creation of purchase requests. One standout feature is its support for punchout catalogs, which streamlines the procurement process by enabling users to browse vendor websites and select items easily.

Here’s How it Works in Practice:

• Vendor Selection: The process commences with the employee selecting the vendor from whom they wish to purchase. For instance, let’s consider the popular vendor Amazon.

• Vendor Website Access: ProcureDesk seamlessly guides employees to the selected vendor’s website. Here, the employee can freely browse and select the items they intend to purchase.

Example: Battery Purchase: Let’s say the employee needs to purchase a pack of batteries.

• Approval Prompt: After selecting the desired items, the system prompts the user to seek approval for the purchase.
• Automated Request: The system then takes charge, automatically populating the selected items within the employee’s purchase request. It’s as straightforward as that.

This streamlined process eliminates the need for employees to manually copy website URLs and leave notes for buyers to decipher. With ProcureDesk, purchasing becomes a hassle-free experience, saving valuable time and reducing complexities in the requisition process.

Purchase Order

Creating and managing your company’s purchase orders manually can be time-consuming and error-prone. Automating your purchase order can offer your company several advantages:

• Error Reduction: Automated systems minimize data entry errors, ensuring your purchase orders are accurate and comply with procurement policies.
• Vendor Integration: Integration with vendor systems can enable your business to experience seamless order placement and tracking, reducing communication delays.
• Spend Visibility: Automated purchase orders provide insights into your spending patterns, helping you make informed decisions.

How To Automate the Purchase Order Process In ProcureDesk

In traditional procurement systems, like Sage, issuing a purchase order often involves manually emailing the purchase order to the vendor. However, with ProcureDesk, this process is seamlessly automated from creation to dispatch.

Here’s How ProcureDesk Streamlines the Purchase Order Process:

• Automated Generation: ProcureDesk can automatically generate purchase orders, either directly from an approved purchase requisition or by allowing a buyer to convert an approved purchase request into a purchase order. This eliminates manual data entry and speeds up the procurement process.
• Customizable Templates: ProcureDesk provides user-friendly purchase order templates that allow you to tailor the appearance of your purchase orders. You can customize these templates to include special comments for suppliers or incorporate your standard terms and conditions, enhancing the clarity and professionalism of your purchase orders.
• Effortless Dispatch: ProcureDesk handles the dispatch process once the purchase order is ready. It sends the purchase order to the vendor using its preferred method, ensuring a seamless and efficient communication channel. ProcureDesk supports various methods for generating purchase orders, including:
• Electronic Data Interchange (EDI): The system seamlessly supports cXML as the preferred method for EDI purchasing and custom transactions, facilitating efficient electronic communication.
• Email: In cases involving smaller vendors, ProcureDesk can conveniently email the purchase order directly to the vendor, streamlining the process and ensuring timely communication.

ProcureDesk’s automation of the purchase order process enhances efficiency and improves accuracy and vendor communication. It simplifies the creation, customization, and dispatch of purchase orders, allowing your procurement team to focus on more strategic tasks while ensuring a smoother purchasing experience for all stakeholders.

Here is a sample purchase order from ProcureDesk:

Invoice Management

Manual invoice processing can cause your business to experience delays, duplicate payments, and even lost invoices.

But by automating this process, you can transform your accounts payable department and experience:

• Faster Approval: Automated approval workflows ensure invoices are processed and paid promptly, taking advantage of early payment discounts.
• Accuracy: Automated data capture and matching capabilities reduce errors and help prevent overpayments.
• Auditing and Compliance: Automation makes enforcing compliance with procurement policies and auditing invoices for discrepancies easier.

How To Automate the Invoice Management Process In ProcureDesk

To streamline your accounts payable workflow using ProcureDesk, you can start by automating invoice management. Here’s a straightforward guide:

• Digitize Invoice Collection: If you currently receive paper invoices by mail, begin by shifting to email-based invoicing. Create a dedicated email account (e.g., invoices@yourcompany.com) for this purpose.
• Standardize Communication: Make sure all vendor communications use this dedicated email address. Instruct your team to forward received invoices to this email.
• Set Expectations: Communicate within your purchase orders that your company will only process electronically received invoices.

Here is a sample electronic invoice as seen in ProcureDesk:

Following these simple steps and using ProcureDesk’s automation features will transform your invoice management, boost efficiency, and reduce paper clutter.

Vendor Management

Vendor relationships are an important aspect of the success of your procurement function. Here are some ways procurement automation can help improve how you manage your vendor relationships:

• Performance Tracking: Automated tools can track vendor performance metrics, helping you identify and address issues promptly.
• Contract Management: Store vendor contracts digitally and set up alerts for renewal dates and compliance requirements.
• Communication: Automation can facilitate communication with vendors, streamlining the exchange of information and reducing manual effort.

Contract Approval

Contract approval is another critical aspect of your procurement process. Here are some significant benefits of automating your contract approval process:

• Version Control: Maintain a single, up-to-date version of contracts, reducing confusion and ensuring compliance.
• Approval Workflows: Implement automated approval workflows to speed up the contract approval process.
• Compliance Monitoring: Automated systems can monitor contract compliance and trigger alerts for agreed-upon-standard deviations.

Ways Procurement Automation Can Improve Your Procurement Process

Your company’s procurement automation can be achieved through a variety of technologies, which include:

• Robotic process automation (RPA)
• Artificial intelligence (AI)
• Machine learning (ML)
• Natural language processing (NLP)
• Cloud-based software

Whatever technology your company chooses, procurement automation can help reduce costs, improve efficiency, reduce human errors, and gain better visibility.

Let’s discuss each of these briefly:

Reduce Costs

By automating repetitive and time-consuming tasks, the procurement teams in your company can free up their time to focus on more strategic activities. This can lead to significant cost savings and potentially decrease labor costs.

Improve Efficiency

Procurement automation can help your business streamline its procurement process and reduce time to complete tasks. This can lead to improved productivity and efficiency.

Reduce Errors

Procurement automation can help your company reduce human errors and improve the accuracy of your procurement process. This leads your business to experience fewer mistakes and even improves compliance.

Supplier Management

You can use procurement automation to automate tasks such as supplier onboarding, supplier management, and risk management. This helps your organization build stronger relationships with suppliers and reduces the risk of supply chain disruptions.

Sourcing

Did you know that you can use your procurement automation to automate your tasks, such as RFI/RFP creation, evaluation, supplier negotiation, and contract creation? This helps your organization source the best possible goods and services at the best possible price.

Contract Management

Procurement automation can help your company automate contract creation, review, approval, tracking, and compliance monitoring tasks. This helps your business ensure that your contracts are fair and compliant and that you get the most value from your supplier relationships.

Purchase Order Processing

Procurement automation can automate your tasks, such as purchase order creation, approval, and routing. This helps you streamline your purchase order process and reduce the time it takes to deliver your goods and services.

Invoice Processing

Your procurement automation can automate your tasks, such as invoice receipt, data entry, and approval. This helps you reduce the time it takes to pay invoices and improve the accuracy of invoice processing.

Spend Analysis

You can use procurement automation to collect and analyze procurement data to help you identify trends, savings opportunities, and improvement areas. Your company can use this data to make better-informed decisions about your procurement spending and strategy.

Steps To Implement Procurement Automation

Implementing procurement automation software for your organization will enhance efficiency, reduce costs, and streamline operations.

To achieve a successful automation implementation, you must follow a structured approach.

Here are the steps to implement procurement automation for your business:

Step 1: Map Out Your Current Workflow

The first step is to map out your existing procurement workflow. This will help you to identify the different steps involved in the procurement process, as well as the roles and responsibilities of each team member.

Step 2: Evaluate Your Current Processes

Once you have mapped out your existing procurement workflow, the next step is to evaluate each step to identify potential areas for automation. Consider which tasks are repetitive, time-consuming, or error-prone. These are the tasks that are most likely to benefit from automation.

Step 3: Choose Your Automation Software

Choose an automation software solution once you have identified the areas you want to automate.

Different automation software solutions are available, so choosing one that meets your business requirements is important. Consider the size of your business, industry, and the specific features you need.

Step 4: Design A New Automation Workflow

Once you have chosen an automation software solution, the next step is to design new automation workflows. This involves mapping out the new steps involved in the procurement process, as well as the roles and responsibilities of each team member.

Step 5: Implement And Test

Once you have designed new automation workflows, the next step is to implement and test them. This involves configuring the automation software solution and testing the new workflows to ensure they work properly.

Step 6: Measure And Improve Your Output

Once you have implemented and tested the new automation workflows, the next step is to measure and improve their output. This involves tracking the new workflows’ performance and identifying improvement areas.

What Are The Challenges Of Manual Procurement Processing?

Manual procurement processing poses several challenges that can hinder your business’s efficiency. Aside from that, it also increases the risk of errors and delays.

One major challenge of manual procurement processing is the presence of human bias and errors in the procurement process. These can lead to fraud, data inaccuracy, and incorrect purchasing decisions, ultimately impacting the organization’s bottom line.

Another challenge is the potential for delays and bottlenecks in the procurement cycle. Manual processes are often time-consuming and require multiple levels of approval, resulting in longer cycle times and delayed purchase requisitions. This can impede the timely delivery of goods and services to the organization, affecting its overall operations.

Manual procurement processes also make tracking and managing indirect purchases difficult. Without a centralized system, overspending on indirect purchases can occur, as there is limited visibility into spending patterns and supplier relationships.

Some other common challenges include:

• Displacement and damage to paperwork and other paper invoices
• Delays and potential compliance issues
• Labor-intensive supplier relationship management

Your organization should adopt procurement automation solutions and digital procurement technologies to overcome this challenge.

These solutions can help you streamline your procurement process, reduce human error, improve cycle times, enhance data accuracy, and even enable your organization to make more informed and data-driven decisions.

What Are The Top Procurement Technology Trends

There are several emerging procurement technology trends in the industry today. Let’s briefly discuss each of these:

• Cloud-based procurement software: Cloud-based procurement software is becoming increasingly popular, offering several advantages over on-premises solutions, such as scalability, flexibility, and maintenance.
• Data analytics: Data analytics is another important trend in procurement technology. By analyzing data from their procurement processes, businesses can identify areas where they can improve procurement efficiency, reduce costs, and mitigate risk.
• Micro-services and low-code automation platforms: Micro-services and low-code automation platforms make it easier for businesses to automate their procurement processes. These platforms allow businesses to break down their procurement processes into smaller, more manageable tasks and to automate those tasks without having to write any code.
• AI and machine learning technologies: AI and machine learning technologies automate procurement tasks, such as supplier selection, contract management, and fraud detection. These technologies can help businesses improve their procurement processes’ accuracy and efficiency.

How Elhogar Leveraged Purchase Automation Using ProcureDesk

El Hogar Community Services’ mission is to provide services that contribute to individuals’ and families’ mental health and emotional well-being.

Established in 1977 as a not-for-profit organization, it today has 5 different programs to help serve the community, from senior care to specialized mental health services.

When Beatrix Koev (Fiscal Director, Elhogar) joined the nonprofit in 2018, one of her key objectives was to have complete visibility into expenses. Not only was it good finance hygiene, but Elhogar also had cost-reimbursement contracts with the County they served. So, the sooner they knew the expenses, the sooner they could get reimbursed. She needed to spend visibility on providing complete transparency to all stakeholders.

The purchasing process was very manual. Employees from different programs would fill in a requisition form, which was then submitted for approval via email. This caused a lack of transparency because the Finance team wouldn’t know what was being approved.

Elhogar’s journey towards purchasing automation using ProcureDesk brought about remarkable results:

• Efficiency Gains: The manual process of filling out requisition forms, seeking approvals, and tracking purchases consumed time. With the new automated system, employees at Elhogar could create purchase order requests in just a few minutes, a significant improvement from the 10-15 minutes it used to take.
• Streamlined Approvals: The approval process, which was previously plagued by delays and a lack of transparency, saw a remarkable transformation. Employees could now track the status of their purchase requests in real time. This transparency significantly reduced the approval cycle, cutting it by more than 50%.
• Improved Spend Visibility: The shift from manual processes to automated purchasing allowed Elhogar to gain clear oversight of monthly purchasing activities. This newfound visibility into spending patterns enabled them to make more informed decisions regarding budget allocation and cost control.
• Integration with Accounting: Automation facilitated the swift integration of payables into the accounting system. This seamless integration not only saved time but also enhanced the accuracy of financial records.
• Audit-Proof Processes: Compliance and transparency are paramount for organizations dealing with public funds. Elhogar achieved audit-proof approval processes, ensuring that all procurement activities met regulatory requirements.

The adoption of procurement automation through ProcureDesk had a profound impact on Elhogar Community Services.

It streamlined their purchasing processes, provided real-time spend visibility, and significantly improved efficiency. This transformation was a technological upgrade and a cultural shift that empowered program owners and employees to take ownership of the purchasing process.

Ultimately, the successful implementation of purchasing automation helped Elhogar fulfill its mission more effectively and efficiently, contributing to the mental health and well-being of individuals and families in their community.

FAQs

What Is The Impact Of Automation In Procurement?

Procurement automation can help businesses:

• Save time and money by automating repetitive routine procurement tasks
• Improve efficiency and productivity by streamlining procurement processes.
• Reduce errors and improve accuracy by eliminating manual intervention.
• Gain visibility and insights into procurement spending and performance.
• Mitigate risk by identifying and managing supplier risk, ensuring compliance, and detecting fraud.

Overall, automation can help businesses improve their procurement process in several ways, leading to increased efficiency, reduced costs, and improved visibility and control.

How Can Enterprises Leverage Technology To Streamline Procurement Processes?

Enterprises can leverage technology to streamline procurement processes by:

• Using cloud-based procurement software to automate workflows and improve collaboration.
• Adopting data analytics to gain insights into spending and performance.
• Implementing automation to reduce working on repetitive tasks and prevent errors.
• Leveraging AI and ML to automate complex tasks and improve efficiency.

What Are The Stages Of Procurement?

Here are the stages of procurement:

1. Sourcing: Identifying and evaluating potential suppliers.
2. Negotiation: Negotiating contracts with suppliers.
3. Order placement: Placing purchase orders with suppliers.
4. Fulfillment: Receiving and inspecting goods and services from suppliers.
5. Payment: Paying suppliers for goods and services received.

What Are The Three Ps Of Procurement?

1. Price: The cost of goods and services.
2. Quality: The quality of goods and services.
3. Performance: The reliability and timeliness of suppliers.

How Can Automation And Technology Help Manage Procurement?

Automation and technology can help manage procurement by automating tasks, improving efficiency, and reducing errors. For example, automation can be used to:

• Automate the purchase order process
• Automate the invoice processing process
• Automate supplier onboarding and management
• Automate contract management and analysis
• Automate fraud detection

What Is Procurement Automation Software?

Procurement automation software is software that helps businesses to automate tasks and workflows within the procurement process. Procurement automation software can help businesses to:

• Reduce costs
• Improve efficiency
• Reduce errors
• Gain visibility into spending and performance
• Mitigate risk

How Can Legal Technology Improve Your Legal Team?

Legal technology can improve your legal team by automating tasks, improving efficiency, and reducing costs. For example, legal technology can be used to:

• Automate document review and analysis
• Automate contract management
• Automate legal research
• Automate e-discovery
• Automate compliance management

What Are The Three Main Types Of Procurement

The three main types of procurement are:

1. Direct procurement: The procurement of goods and services used directly in producing goods or services for sale.
2. Indirect procurement: The procurement of goods and services used to support the production of goods or services for sale, such as office supplies and equipment.
3. MRO procurement: The procurement of maintenance, repair, and operations goods and services.

What Are The Example Use Cases For Procurement Automation?

Check out some of the example use cases for Procurement Automation:

• Procurement framework: Procurement automation can automate the entire procurement framework, from sourcing and supplier management to contract management and invoice processing. This can help businesses to streamline workflows, improve collaboration, and reduce costs.
• Vendor agreement generator: Vendor agreement generators can automatically generate agreements based on pre-defined templates and data from the procurement system. This can help businesses save time and ensure vendor agreements comply with company policies and procedures.
• Vendor risk assessment: Procurement automation can automate the vendor risk assessment process. This can help businesses to identify and mitigate potential risks associated with suppliers.
• Procure-to-pay: Procure-to-pay automation can automate the entire process, from purchase order creation to invoice payment. This can help businesses reduce the time it takes to process invoices and pay suppliers and improve invoice processing accuracy.
• Asset purchase agreement: Procurement automation can automate the asset purchase agreement process. This can help businesses to reduce the time it takes to negotiate and execute asset purchase agreements.
• Procurement agreement: Procurement automation can automate the procurement agreement process. This can help businesses to reduce the time it takes to negotiate and execute procurement agreements.
• Purchase agreement: Procurement automation can automate the purchase agreement process. This can help businesses reduce the time it takes to negotiate and execute purchase agreements.
• Purchase order agreement: Procurement automation can automate the purchase order agreement process. This can help businesses to reduce the time it takes to create and send purchase orders to suppliers.
• Service agreement: Procurement automation can automate the service agreement process. This can help businesses to reduce the time it takes to negotiate and execute service agreements.
• Vendor agreement: Procurement automation can automate the vendor agreement process. This can help businesses to reduce the time it takes to negotiate and execute vendor agreements.
• Vendor NDAs: Procurement automation can automate the vendor NDA process. This can help businesses to reduce the time it takes to negotiate and execute vendor NDAs.

The Bottomline

Without a doubt, procurement automation is a game changer for your company’s finance team. It improves the efficiency of automating manual tasks and empowers your company towards strategic decision-making.

With cloud-based procurement software that provides your team with a central repository for all procurement-related information, your company gains better visibility and transparency in your company’s operations, improving your bottom line!