How to Use Automation to Optimize Procurement Processes
Today, marketing procurement teams continue to be measured on how efficiently and effectively they are able to drive costs down or out. This is complicated by the fact that while spend must be less, value must be more. Increasingly, procurement is tasked with not only ensuring reliable and responsibly-sourced supply at the lowest possible cost, but also with selecting suppliers and building key relationships that contribute to innovation and differentiation.
It’s a tall order, for sure, and one that requires a sophisticated, strategic sourcing model that both maximizes the power and increases the agility of people and processes. In order to achieve these goals, many companies are looking to procurement automation to increase efficiency. However, identifying how and where to use automation to optimize procurement processes is key to avoiding any spanners in the works that end up doing more harm than good.
Traditionally, due to its very nature, procurement has always been difficult to automate, since each operation involves multiple users, stakeholders and systems. The process of obtaining any new marketing products or services involves numerous steps to be taken from multiple departments – from first identifying the need for a new solution, to finding the right provider, initiating the order, controlling the delivery process, and ensuring that all invoices are approved, paid, and stored efficiently. It’s a complex function indeed, so no wonder that bottlenecks are not infrequent occurrences.
But in 2017, just as digital solutions are becoming rife across all departments in nearly all industries, so they are with procurement. From managing supplier relationships to effecting supply chain digitization, and from optimized ordering to timely transparency on spending – smart use of automation can revolutionize many parts of the procurement process, optimizing efficiency and releasing additional value, all while keeping costs down.
How to Use Automation to Optimize Procurement Processes
Let’s be clear – the goal of procurement automation should be to speed up processes in order to free employees from repetitive and time-consuming tasks, allowing them to focus on more business-critical operations. Indeed, this is where much of the true value lies, and the high percentage of such repetitive tasks and processes in procurement make the function ideal for automation.
So how can procurement be automated effectively? Let’s consider some key areas of focus.
Purchase Requests and Approvals
The first step will be to understand and document the current challenges that your procurement teams face, and how they can be addressed by automation. The objective will be to identify which areas need to be accelerated, and which administrative tasks are currently the most repetitive and cumbersome.
For example, when new purchases are required to execute a new marketing campaign, procurement shouldn’t be where great ideas go to die. In the demand stage of the procurement cycle, the main process is in creating the purchase requisition. This involves gathering information pertaining to the details of the request and the supplier, and obtaining the necessary approvals.
Your key goals here would be to ensure first that the correct information is gathered and then funneled through the necessary series of approvals with an automated workflow. This will replace traditional time-consuming, email-based, manual processes that are far from seamless and often require numerous follow-up actions. When the right information is always collected first time, captured electronically, and approvals can be made from any device, anywhere, and at any time (such as is enabled with e-signature solutions), efficiency savings can be stupendous – especially when multiplied over numerous procurement operations over the course of a year.
Sourcing and Evaluating Suppliers
The data that you already have should be your starting point, but know one of the greatest benefits of automating procurement is that you will begin amalgamating better and more reliable data as time goes by – data such as order history, supplier profiles, and contracts.
Procurement automation can help you get a clearer picture of many things – the track records of suppliers; pricing inconsistencies; recognizing when volume discounts would be applicable/negotiable.
When automation is done correctly, suppliers will be able to respond to bids more quickly, and have easy access to contracts and other information important to the order. Buyers, in turn, will also be able to track orders more efficiently and accurately within an automated system, as records can be easily accessed and used to evaluate the most effective suppliers.
Invoices and Payments
Keeping good relationships with key suppliers is of course one of the most important responsibilities of any business. As such, having complex internal processes that slow down or delay payments isn’t the way to go if these good relationships are to be maintained.
Automating payments will ensure that all suppliers are paid the correct amount on time, every time, and that they remain happy and excited to continue doing work with you.
And it works both ways. It’s certainly not unheard-of for a business to pay invoices for goods or services never received, simply due to the lack of a reliable system of approvals and input from everyone involved in the supply chain. Automation can all but completely eliminate the risk of such occurrences.
Choosing the Right Technology
Of course, technology remains the enabler that will allow you to automate your procurement. When considering your options, you need to make sure that the solution you choose is the best-fit for your business, that it will encourage a positive uptake from staff, as well, of course, that it is capable of engendering all the process efficiencies that will lead to more valuable purchases and long-term cost savings.
The solutions that are out there vary significantly. What you should ensure, however, is that you look for one that is user-friendly (ensuring that the staff onboarding process is fast and streamlined), and that it is cloud-based (enabling access from anywhere). Finally, ensure that all stakeholders are invited to evaluate the proposed products so you can identify the most optimal solution.
Procurement automation is set to be a hot topic at this year’s ProcureCon Marketing conference, taking place this November in Los Angeles, California.
Be sure to download the ProcureCon Marketing 2017 Agenda for more top insights and challenges facing the industry today.