5 Most Important Procurement Solutions In 2022 You Need

Introduction

Every organization is keen on spending less on purchasing goods while maintaining excellent supplier relationships. The procurement process is cumbersome, with several repetitive steps that consume lots of hours. According to a recent study, more than 60% of the companies don’t use procurement tools and use the age-old Microsoft Office to manage the procure-to-pay process. Research on procurement process automation shows that Global 5000 could save up to $86 billion annually if a dedicated procurement system is used. The money invested in the automation of the procurement process is earned back quickly in terms of cost savings in procuring goods and services. 

Procurement Process Challenges

When the procurement process is done manually, the procurement department manages and optimizes corporate spending on goods and services. It is prone to human errors and causes delays in order processing. Following are some of the challenges currently faced by organizations during the procurement process:

• Risk management: Finding and retaining a trustworthy supplier who supplies goods and services at a reasonable price is difficult. Non-compliance of vendors, low-quality goods, invoice fraud are some of the many risks that your organization has to deal with.
• Inefficient process: Manual procurement process is inefficient as the procurement department is overwhelmed with all the paperwork. A streamlined process will save a lot of overhead costs. 
• Improper communication and data processing: In the manual method, clutter-free paperwork is impossible to maintain. As a result, data availability is inconsistent. It makes it even more difficult for procurement officers to make important purchase decisions. 
• Vendor relationship management: The procurement goals of the organization should align with the business goals of the vendors. They must be kept in the loop throughout the process to avoid time delays. 
• Cost management: One of the key points to focus on in optimizing the procurement process is cost savings. The fluctuating cost of goods and transportation makes cost management even more difficult for organizations. 

How Can The Procurement System Address Major Challenges?

An automated procurement process will help your organization minimize risks, reduce costs and avoid supply chain malfunctions. By optimizing the procurement process, sourcing cycle times are shortened, increasing profitability. 

#1 Improve Supplier Performance With Superior Supplier Relationship Management

The automated procurement system will keep the communication line between the organization and suppliers open. Reviewing and monitoring the suppliers and vendors periodically avoids supply chain disruption. The procurement data is shared with the vendors to improve their quality and performance. 

#2 Make Wise Decisions Using Procurement Analytics

The automation system keeps track of the vast amount of data involved in the procurement process. The procurement solution software can analyze this data and evaluate the procurement process. This will help the top procurement officials to make better business decisions. 

#3 Improve Cost Management

During the recurring procurement process, every dollar spent is tracked by the procurement software. The availability of cost data makes purchase requisitions, purchase orders, and invoice payments transparent. The software helps identify the resources that the organization needs and the cost of acquiring those resources. The transparent cost management system eliminates hidden spending. 

#4 Expand Supplier Pool By Adopting Global Procurement

With the huge Internet of Things and constant connectivity offered by cloud-based procurement solutions, your vendor pool is not limited by demographics. The procurement software can deal with multiple international currencies, foreign languages, and logistics options. It allows your organization to think outside the box and look for vendors from remote locations. 

#5 Standardize And Simplify Procurement Workflow

The online procurement software eliminates the need for manual paperwork. It saves a lot of time and also improves data accuracy. Every step of the procurement process can be standardized and optimized based on organizational needs. Transactions are tracked right from the approval stage through payment. Every purchase requisition is properly approved, and timely orders are placed automatically. No purchase is allowed off-contract outside of the scope of the procurement system. It also allows your procurement department to spend more time improving supplier relationship management. 

Conclusion

The procurement solution also directly helps with inventory management. Obsolete or overstocked inventory will become a thing of the past with a streamlined procurement process. The vendors are also notified of the completion of each step of the procurement process to ensure timely delivery of goods and services. As the centralized data is available, the procurement process can be audited periodically for optimization. The focus of your business can be shifted to customer needs when sales data is incorporated into procurement data. An integrated procurement system will improve profitability by aligning the procurement process with your customers’ current demands.