Having the right systems in place is critical for organizations in our age to drive the bottom line. For many modern businesses, a web-based procurement system is a key component in increasing productivity and profit by providing widespread functionality across the organization's procurement process.
Because of its wide reach, the question of how an organization should use its web-based procurement solution is not often a one size fits all solution across all businesses. Some users or teams might find the software adequate in supporting their day-to-day operations, while other groups are left to deal with consequences like mismanaged projects, accounting issues, and delays in action items– all of which may have been completely avoidable.
Are these signs that you are not using your cloud-based procurement platform properly, or are there other factors at play? In this post, you will find areas to focus on to help you maximize the use of your web-based procurement platform from the perspective of three key users: purchasing teams, financial teams, and senior management.
WHAT IS A WEB-BASED PROCUREMENT SYSTEM
A web-based procurement platform, also known as a cloud-based purchasing platform or e-procurement platform, is designed to assist in the purchasing of goods and services at the optimal price and time. A procurement solution that helps with end-to-end purchase management like this also provides visibility into and more control of your purchasing approval process, making it easier to realize cost savings. This system facilitates many different actions, such as:
- Automating purchase requisition tasks to free time and reduce human error
- Procurement software streamlines communication within and outside your business to efficiently manage transactions
- Creates a system that helps to centralize information for all purchasing projects
- Giving real-time data to those who need up-to-date information and efficient risk management
- Affords for efficient negotiations and purchasing
The following will give examples of how three types of teams can get the most out of your web-based procurement solution.
(1) PURCHASING TEAM
Being part of the purchasing team, one of your top goals is to successfully manage purchase orders. With this in mind, you want to use your software as the source of truth to create purchase orders and monitor them. You want to use the system to ensure the final purchase is made as efficiently and profitably as possible.
The procurement management software will help collect all the information you need from requisitioners and assign orders to the necessary purchaser. The person can then review the items and make the final decision on which supplier to place the purchase order with. The owner of the task can approve, add or remove items as they deem necessary. You want to rely on the information provided but also confirm everything makes sense.
A web-based procurement management solution ensures all items required for purchase are recorded in one system. This ensures that things that are needed won't be missed by procurement teams. The modern procurement system will keep tabs on order status as they move through your supply chain and let you know if anything needs to be actioned. You do not have to worry about manually tracking orders and the errors that come with doing so. You should ensure you follow up based on the alerts you receive within the software or automate the software to send follow-up emails for you.
The purchasing software will allow you to easily send and maintain purchase orders. You will be able to format your purchase order form to add information and other items that you see fit. This customization enables you to easily export purchase orders and send them to your supplier. It also affords the ability to automate emailing of your orders as well.
ECONOMIES OF SCALE
By efficiently tracking your orders and each item's status along the way, you are able to gather insights into your purchasing. This affords the opportunity to purchase items at a given frequency to offer cost-saving potential. By lowering your per-unit cost, you increase your margins in the procure-to-pay process. This cost-saving potential comes with the following:
- Reduced pure product cost – you can receive a discount in purchasing more of an item
- Reduced administrative cost – by purchasing more and less frequently, you decrease the time you and your team spend on managing orders.
- Reduced logistics cost – by buying in bulk, you can realize better shipping rates, less frequent shipping costs, less handling fees, and other costs associated with getting the products into your warehouse.
By making more products, cost savings can happen. You can increase your profits by making your purchasing more efficient and reducing your costs at many points within your supply chain. You should use the information provided within the software to determine if it is possible to save using an economy of scale by purchasing more and less frequently.
Being part of the purchasing team, a cloud-based purchase order system will cause efficiencies by using information and communications stored within the software. With this information, you can determine what items are needed based on their specific details. By having this central place of information, you can streamline your purchasing workflow by having clear and concise action items with data that is readily available. Procurement professionals just have to ensure they take action as required at every point in time.
(2) FINANCIAL TEAM
Staying on top of your company's finances is no easy task. With so many moving parts, keeping track of your purchasing and determining when to make payments and how much to pay can be difficult. A web-based procurement tool can help alleviate confusion and miscommunication through the organization of data, from reconciling invoices to managing expenses to integrations and automation. Some of the spend management features of the best procurement software are highlighted below:
Knowing what was ordered versus received and, ultimately, what needs to be paid for can be a nightmare for financial teams. Procurement software can make this process easy to follow and very clean for your finance team with features such as:
- Receipt information – you can use procurement tools to gain complete oversight into receipt dates, receipt quantities, and the warehouse location receipt took place; all provide important details needed to pay invoices.
- PO status information – by notating POs that have either been partially received, fully received, partially paid, or fully paid, finance team members can easily navigate between what needs to be acted upon or review what has already been paid to assist in the reconciliation process.
- Communication – the ability to keep all important documentation and notations in one place and attribute them to item receipts.
By keeping detailed and accurate data, invoices can easily be matched to received quantities to avoid discrepancies. Even if discrepancies are found, team members can communicate issues at each level of the process, from ordering to delivering to receiving. By ensuring documentation at all levels, the financial team is able to efficiently pay bills even if there is a problem since all data is consolidated in one place.
Electronic procurement software offers process automation which helps save time by eliminating the need to input unnecessary data or manually approve invoices for payment. By syncing data between purchase orders, receipts, and invoices, items that match perfectly can be automatically paid, or invoices can be automatically generated for better procurement experience.
A cloud-based solution can also record credit note data, and if credit is owed, it can be automatically applied to invoices. This way, you can efficiently manage any credits on your account without having to manually manage the credit notes. Using a cloud-based procured software will ensure you do not leave this money on the table. You need to make sure to enter the credit once received, and it will be applied according to the information you entered.
To further enhance your automation, web-based procurement systems can integrate with your existing systems, including your accounting solutions, ERP systems and other tools. Having this level of synchronization ensures your bookkeeping matches your receipts. Data flows between the software to save time, flag missed entries, and provide detailed line item and payment information.
By automating the synchronization of invoices, purchase orders, and receipt records, the e-procurement software facilitates hassle-free payment. By streamlining this process and removing manual entry points, the finance team will make fewer errors and spend their time on more business-critical tasks.
The beauty of online procurement is that you do not have to be at a physical location to take advantage of its features. A web-based procurement tool enables procurement teams to effortlessly manage purchase or vendor request in order to minimize company expenses and control spend.
Employees can expense items on their credit cards and phones, and it will be recorded to the software. Attaching receipts and other documents while the expense is taking place cuts down on not accurately expensing items. No more paper receipts. You can capture items directly from your phone via screenshots or photos and upload them directly into the software.
You can easily track how much your business users spend on products and services and see who is following strategic procurement guidelines. You have full visibility into reimbursement requests and who needs to get reimbursed. Approval features within the software allow for timely reimbursements by showing who has been approved to be reimbursed in real time.
Allowing your procurement software to manage your expense management process leads to greater efficiency in the procurement management process. You can seamlessly review paid expenses and expenses needing attention for prompt action. By containing processes to capture expenses and approval for these expenses, your team saves time. By accurately capturing expenses as they are happening, your team may save money from costly errors and inaccurate expense reporting.
(3) SENIOR MANAGEMENT
The goal of the senior manager is to develop strategies for the business, set and measure goals, manage objectives, and establish efficient processes, all in the name of cost savings and profitability. All of these make web-based procurement software the right tool for senior managers to keep a handle of their organization's buying experience and overall procurement system. By managing cost-saving opportunities in contract negotiations, managing approval workflow, and providing accurate reporting, procurement software can help you drive your business in the right direction.
By carefully managing your contracts with suppliers, you can increase profitability through cost-saving. Using a leading intake-to-procure solution, you can optimize the contract review process, manage supplier relationships and track suppliers' performance. This helps to ensure suppliers deliver the best value and hold them accountable for late deliveries, missed shipments, cost increases, and other business impactful metrics. Using this information, you can negotiate and tailor contracts with partners emphasizing your business's actual procurement data and historical needs.
Within the cloud procurement platform, you can also manage your business operations to ensure the most up-to-date pricing and terms are being used within your purchases. These items will automatically flow instantly into your requisitions and purchase orders once the contract is activated in the system. You have full insights into the tasks completed from each contract and monitor the performance and impact of the terms for that specific agreement.
Procurement systems will help businesses track how contracts with suppliers of goods or services are performing. The contract management system will also ensure your team is operating within the terms of the contract and won't allow them to go outside any of the guidelines of the contract. The system will let you know when a contract is ending, and based on its performance, you can easily decide whether to renew or not go forward for another term of the contract.
You can also manage requests for quotes within the software. You can send the same requests to multiple suppliers, and by consolidating information obtained from requests, the software allows for greater negotiation power. By having all information at your fingertips, you can compare quotes in real-time to easily identify the best pricing and terms.
A tool that enables businesses to track important information regarding their terms and pricing with suppliers, ensures they're getting the best deal. You should pay attention to the information presented to you from the software to ensure you are agreeing to the most profitable terms available to your business.
Approval workflows help reduce unwanted spending from purchases to expenses. Having control of how money is spent is key to ensuring costly mistakes do not happen, as ultimately, it will be the senior procurement manager who will be accountable for the financial hit. The ability to gain visibility and control to approve or reject an expenditure like this can prevent costly mistakes.
A web-based procurement solution will let managers know when something needs to be approved. They can opt to also receive emails or other messaging to ensure things don't get missed and are improved in a timely fashion. Once approved, other team members can get the same alerts to ensure action is taken once approval is given.
To make the process more efficient, you can grant team members certain limits on expenditures or activities. You can set parameters on certain user restrictions to prevent unnecessary bottlenecks. You can also set up different levels of approvals to ensure by the time it gets to your desk, you are the final approval needed.
Managing spending is important to any business. Part of this is ensuring that certain items over a certain limit need to be approved. Web-based procurement software manages this process and ensures money is not being wasted. By setting up rules and limits, you can ensure that your time is being spent on only items that you need to see and allow for your team to operate efficiently.
Tracking progress is important in procurement and management. Without knowing your previous performance, you will not know areas of opportunity, and most importantly, you won't know how or if you are improving. A complete purchase management suite can help by tying your data together and generate reports to help analyze how you buy goods and services.
It also allows you to create your own custom reports. Part of the data that can be generated in your reports are:
- Purchase order data – purchasing cadence can show gaps or too frequent purchases.
- Category-level data – Use the procurement cloud to examine category information. This can show underperforming areas of your business that may need to be addressed.
- Item level data – cost changes over time or by different suppliers can lead to sourcing discussions or price updates to customers
- Suppliers – see how suppliers are performing over time and review the process or performance of the different vendors against each other to help you select the best.
- Spend data – complete oversight of how you are spending your money so you can track areas where you can cut costs.
Using up-to-date data can drive your business forward. Being able to quickly identify any areas of opportunities within your company at all levels can prove to be invaluable. You can strategically drive action, and more importantly, you can confidently speak to your business's performance and your game plan to improve.
Overall, procurement software solutions enable easy synchronization of communication and approval workflow. Using the best procurement tool to manage your purchasing process helps to track supplier and business performance, manage processes and documentation, and provide action items to appropriate teams. This drives efficiencies, enhances margins, and increases profits.
There are many benefits to using a cloud-based procurement solution, and incorporating it into your existing business process is recommended. An effective procurement solution that helps companies maintain control across all levels of their organization can improve current procurement structure significantly.
Similarly, a procurement platform that helps companies track procurement effectively will cut down on costly mistakes that are common in manual processes. With the ability to easily manage cross-functional collaboration, it will greatly make your business processes more efficient for your whole team.