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Finally Optimize Your Procurement Workflow Automation
Do you want to optimize your procurement process?
The answer is obvious: yes!
Every company can benefit from a more streamlined and efficient procurement process. This is especially true now that supply chains can be so unpredictable. Procurement is a vital process for all companies, particularly those that rely on the timely delivery of parts, equipment, and supplies (e.g. manufacturing companies, hospitals, etc.).
Procurement automation software makes optimizing your workflow much easier. There’s a good chance that business process automation (BPA) software is already on your radar. Many companies have implemented procurement process automation already, or plan to implement this type of software soon.
BPA software can dramatically improve procurement efficiency. But it still needs a human touch to truly optimize your procurement process. You’ll need to pair a solid procurement strategy and trained procurement employees with quality procurement automation software to optimize procurement.
Putting Procurement in Context
A well-thought-out procurement strategy will include the entire procure-to-pay process. Procurement starts with identifying needed resources, finding the right supplier(s), then generating purchase orders (POs) and making the purchase. Next, suppliers often send a PO acknowledgment, which the purchasing department checks to make sure items, quantities, and prices match the original PO.
Once the supplier delivers goods, many companies use three-way-matching to check that the PO, goods received, and final invoice all match. Finally, the invoice goes to accounts payable for approval and payment.
Except in the case of one-time purchases (e.g. many capital expenses like company vehicles and large equipment), the procure-to-pay cycle forms a loop. Your company will often do business with the same suppliers over and over, going through the procure-to-pay process multiple times.
When optimizing procurement, remember to place it in the context of the whole procure-to-pay cycle. Also, remember that procurement doesn’t exist in a bubble. Optimizing procurement benefits the entire organization. For example, a well-running procurement department can help optimize cash flow, improve supplier relationships, and support strategic company-wide initiatives.
Planning for Optimization
Whenever you want to optimize a business process, you need to start by defining what optimization means for your company. To put it another way, What would an optimized procurement department look like in your company? What goals do you have for the procurement process?
Defining goals and key performance indicators (KPI) gives you a roadmap for optimizing procurement. If you lay out what goals you want to achieve and the benchmarks you want to hit, it’s going to be much easier to see where to improve the current process. A vision for what optimized procurement will look like also makes it easier to tell when you’ve achieved your goals.
After defining goals for optimization, it’s time to assess your current process. This can be easier said than done. According to Finances Online’s 2023 report, even before the 2020 pandemic 69% of companies reported a lack of visibility into their supply chain. If your company is one of the many without full visibility, you can use the process of assessing the current procurement strategy as an opportunity to list which aspects of the supply chain require more visibility.
During the planning process, particularly once you’ve set goals for optimization and compiled results from auditing current procurement strategies, be sure to elicit feedback from stakeholders. This includes upper finance management, the IT department, and employees working in procurement. All have a stake in the future of procurement and can often provide valuable insight into optimizing the procurement process using automation software.
Understanding the Role of Procurement Automation
Implementing procurement automation provides a tool and platform that enables your company to manage procurement more effectively. Process automation software streamlines the entire procurement process while also providing increased control and visibility.
One of the big problems that plague procurement is maverick spending, where employees go outside the established purchasing process to buy things for the company. Process automation makes purchasing within the software very easy. With NextProcess, punch-out and item catalogs ensure a smooth shopping process for employees while giving the procurement team complete control over approved items and suppliers. The software also makes it easy for the procurement team to manage supplier information.
As employees make purchases within the software, the system automatically generates POs and logs a digital paper trail. NextProcess is constantly updating and improving our software, and one of the newest updates automates the process of reconciling PO acknowledgment from the supplier with your company’s original PO. If everything matches, no one needs to worry about it. If there’s a discrepancy, the software alerts an employee to follow up.
During all this, the procurement automation system logs every step of the process, dramatically improving visibility. You’ll have access to real-time data on active POs. The automation software also makes it easy to generate reports, audit the system, and access data related to procurement. This makes it much easier to track procurement’s performance and use procurement data strategically.
Making End-To-End Automation Work for You
Now remember, the procure-to-pay cycle includes more than just the purchasing process. It also includes receiving goods, processing invoices in accounts payable, and payment distribution. To truly optimize your procurement workflow automation, you need BPA software to cover the entire procure-to-pay cycle.
NextProcess software modules work seamlessly together, providing an innovative end-to-end solution for your whole financial process. We’ve also made our software highly customizable. We’ll work with you during implementation to customize the software to support your company’s goals for optimizing procurement. For as long as you have the software, we’ll keep updating it with new features and provide ongoing support for you to keep optimizing workflow automation. Contact us today to schedule a free demo and see how our procure-to-pay software will work in your company.