Paper-driven procurement has a cascading effect on an organization’s bottom line. A routine purchase generates bundles of paperwork, and needs too many back-and-forth emails to set things straight.
Procurement inefficiencies cost organizations a huge chunk of cash in delayed purchases, missed discounts, and transaction disputes. Attempting to speed up the procurement process with outdated tools like spreadsheets and emails is like trying to start a microwave with steel and flint.
To take advantage of early purchase and payment discounts, organizations need to toss stone-age procurement practices out the window and embrace technological solutions. Modern procurement tools can transform a painfully slow procurement strategy to world class overnight.
If your procurement process still relies on ancient tools, it’s time for a major technology makeover. Here’s all you need to know to power up the procurement process.
What is Procurement?
Procurement refers to techniques, structured methods, and means used to streamline an organization’s procurement process and achieve desired results while saving cost, reducing time, and building win-win supplier relationships. Procurement can be direct, indirect, reactive, or proactive in nature.
What is a Procurement Process?
It’s the series of processes that are essential to get products or services from requisition to purchase order and invoice approval. Although we use procurement’ and purchasing’ interchangeably, they slightly differ from each other.
While purchasing is the overarching process of obtaining necessary goods and services on behalf of an organization, procurement describes the activities involved in obtaining them. The procurement process in an organization is unique to its context and operations.
Regardless of the uniqueness, every procurement management process consists of 3 Ps’, namely Process, People, and Paperwork.
The list of rules that need to be followed while reviewing, ordering, obtaining, and paying for goods/services. Checkpoints/steps increase with the complexity of the purchase.
These are stakeholders and their specific responsibility in the procurement cycle. They take care of initiating or authorizing every stage of the process. The number of stakeholders involved is directly proportional to the risk and value of the purchase.
This refers to the paperwork and documentation involved in every stage of the procurement process flow, all of which are collected and stored for reference and auditing reasons.