Digital transformation in recent years has led to increasing interest in streamlining and optimizing the workflows in all business sectors, including procurement. The old procurement process is often paper-based and is built on a time-consuming, ineffective manual technique with several inaccuracies and bottlenecks.
With automation of the procurement, you will get a lot of benefits. At first, it helps eliminate the costly and time-consuming manual tasks while supplying the supply management professionals with all tools and enhances the visibility required for making better procurement decisions.
Procurement automation helps in decreasing the cost of buying order requisition, submission, and approval up to 75%, and the invoice cost reduces by 90%.
If you are a small to mid-size business is still depending on old school, manual procuring-to-pay approach, you might be spending a lot by wading through a lot of paperwork that generates purchase orders, receiving quotes, and managing payments. Many of the suppliers have already started running on an automated procuring system.
A procurement automation system involves strong accounting and inventory management capabilities. A complete incorporated procurement automation system can offer an extra range of functionality that makes your business process more efficient and accurate, thereby resulting in high-cost reductions and time savings with high ROI.
Procurement automation solutions help speed up and simplify every step of the procure-to-pay process like purchase strategy, vendor selection, approvals, update of inventory, and vendor invoice payments. This all leads to better purchase decisions and enhanced supplier relationships.
Procurement automation is one of the efficient ways for helping all-important business functions to operate efficiently. This is more pertinent now than ever because of the unprecedented supply chain disruption that Covid-19 has caused.
Procurement is essential for mitigation of the business impact. The procurement teams rely on paper-based processes that are not open to change. With that system, it is not possible to gain an insight into several suppliers working with and assess the business continuity.
Digital technologies help the procurement department increase collaboration and engagement along the whole procurement value chain, including planning, sourcing, contract management, payment control, and order delivery.
Here are few ways through which you can save both time and money by extending the procurement automation to services:
Short cycle times, which means fast delivery:
The American Productivity and Quality Center have defined the cycle time required for purchasing orders as the time from when the procuring function needs a requisition line item to the time it submits the purchase order to the supplier.
Procurement automation helps speed up the cycle, which is one of the most significant benefits for SMEs. Significantly, businesses can hugely decrease the time needed for issuing purchase orders to the suppliers for receiving deliveries and for giving the payments to vendors.
Decreases Costs
Another compelling advantage of procurement automation is the capability to use the vendor history data to compare prices and terms and make the best possible deal. Detail purchase and price reports help you recognize which supplier offers the best fit with a fast delivery schedule and the most favorable pricing for any specific order. In this way, it reduces the cost.
The system should also turn an accepted offer into a purchase order and display alternate vendors and the preferred vendor for every item. This facilitates you for requesting quotes from all of your application vendors, thereby resulting in more competition for your business with favorable terms and pricing.
Enhanced communications, thereby saving time
Procurement automation helps in real-time supplier interaction, improving communication and decision making. Instant access to all kinds of purchase documents results in a fast decision in house and speedy deliveries and payments. Better supplier communication means better service and reduced risk of disputes down the road.
Less spends on people
People are always expensive, and hiring an employee is constantly pricey. There are also so many extra costs. Automated procurement helps in handling a wide range of repetitive tasks better than what humans can do. Such kind of software can easily handle notifications, email flows, and many more things.
Helps in enhancing purchase planning
Procurement automation contains all MRP capabilities to easily set the reorder points accurately and avoid unnecessary purchases and expensive inventory. This means you can easily forecast and plan all your material requirements and schedule your buying accordingly.
Update to better procurement with automation
When you switch to an automated procurement system helps in bringing several benefits from enhanced contract management to more planned sourcing to more excellent spend visibility and improved decision making.
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