Automating the procurement process allows any business to transform itself from the ordinary to the extraordinary

Published November 2014

The whole procurement process can be complex, labor intensive and time consuming, but it needn't always be like this.

The procurement process itself requires a focus on strategies surrounding three distinct areas of the business: cost savings, profits and compliance. How these strategies are created and deployed can make the difference between any business achieving significant competitive advantage or not. Automating the procurement function can help leverage economies of scale through better purchasing strategies, as well as facilitating cost cutting and improving efficiencies for customers. Clearly such tools have a strategic role to play in the running of a business. Other benefits include:
  • better alignment with compliance;
  • the cost per purchase may well become lower;
  • easy to use, expert procurement processes, are available at your fingertips;
  • there is improved communication between all departments using procurement;
  • the opportunity for globalization (and the attendant benefits) of purchasing from a wider base comes into play,
  • more effective and profitable negotiations and contracts with suppliers are made possible.
A key measure of success is the ability to capture transaction data across all trading partners and translate that into actionable information. Above all, automation of the procurement process makes for a much more efficient purchasing process with shorter cycle times, which lowers inventory stocks and improves both working capital and profits. This gives business an unrivalled opportunity to transform itself from the ordinary to the extraordinary enabling it to outpace competitors in an ever more volatile and complex marketplace.

Automating the procurement process

Procurement and e-sourcing tools are the category of software solutions that procurement uses to automate sourcing and procurement processes. These robust tools make it easy for suppliers, partners, collaborators and internal departmental users to eliminate manual processes, cut operational costs and respond adequately to compliance regulations as well as comply with auditable processes. Using such tools it is possible to automate all procurement, from strategic sourcing to the procurement of complex maintenance, repair and operations supplies. As a first step some businesses choose to outsource some transactional procurement operations, typically non-critical indirect materials or services. Once these are working well then other procurement operations can be added, like a full strategic sourcing process and procurement for a handful of indirect categories. Most companies will be seeking to attain a level of competency where they feel that the automation of the procurement process encompasses complex category spend - a category of purchasing which includes items being purchased that range from marketing services, print, uniforms & apparel, signage, exhibition & display, packaging and point of sale, gifts and premiums, to office supplies. Using a cloud based spend management system, this is surprisingly easy to achieve - far easier than many companies may think - as it does not depend on waiting upon the implementation of a large scale enterprise resource planning (ERP) system such as SAP which may well be in place to run the large-scale, enterprise-wide functions of a business, nor does it depend upon some expensive and complicated process of integration with any larger ERP systems currently being deployed within the company.

Today's cloud based spend management systems are sophisticated yet simple 'plug and play' systems that are fully integratable and can be bolted on easily with a WYSIWYG system for the end user, making it the perfect combination.

With respected organizations such as "Procurement Leaders" estimating that savings of 30% - 40% are not untypical if such systems are implemented - and, given that it is estimated companies spend around 1-3% of their turnover on complex categories (amounting to apparently around $3tn) - it's no wonder organizations are now embracing these simple to install, bolt-on, spend management tools, the new 'powerhouse' for any organization wishing to drive forward in today's global marketplace. Talk to a member of the Claritum team today about how we can help you harness the power of cloud based spend management tools to automate your procurement processes and bring your complex category spend under control.