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How procurement automation can help in procurement transformation?

By Malvi Goyal
In Procurement Technology
Aug 21st, 2018
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Decisions taken by a procurement department of an organization are of prime importance as they can significantly impact the costs savings. To deliver continuous cost savings and increase process efficiency, procurement professionals are now looking at automating steps of a procurement cycle. Although procurement automation seems like a viable option, it comes with its own set of risks and complications. Are the benefits realized worth taking these risks? Yes, indeed!

Let’s take a look at the underlying philosophy of Procurement – Procuring right thing at the right time at a right price from the right vendor. This forms the essential backbone of a procurement cycle. Going for automation from the manual processes provides clear visibility in the organization-wide spend and tight control of all the procurement activities – be it reducing manual errors, streamlining sourcing, maintaining supplier relationships, controlling spend analysis, etc. Here, we will take a look at five reasons why procurement automation is the answer to simplifying your day to day tasks and how much value technology can bring to your procurement functions.

1. Expedites approval process – Sometimes, purchase requests made get stuck in the approval process. At times, even the processing requests take time due to the hierarchical approval structure. Automating purchase order processing will not only enable quick placing of orders, but it will also cut down time of ordering cycle, remove redundant processes and would enable procurement staff to accomplish more in a shorter amount of time.

Benefits Realized – Reduces staffing costs and provides more time for strategic tasks

2. Provides visibility into your historical spend – The undisputed fact of any automation remains in producing the right quality data. In procurement, this refers to delivering an accurate description of past purchases, supplier quotes, contracts, order history, etc. By deploying a procurement automation, you can have a consolidated view of actual expenses which helps in taking well-informed decisions while making new purchases.  Moreover, it assists in cost reductions on a continuous basis and also helps in identifying the gaps. As a per the Hackett report, the world class procurement organizations has 18% lower procurement costs as a percentage of spend as compared to their peers.

Benefits Realized – Provides cost savings and streamlines spend management

3. Promotes transparent communication with suppliers – Having a clear line of disclosure and transparency with your suppliers is a key to prosperous supplier management. Through automation, it becomes easier for both buyers and suppliers to have real-time communication and track order status. With an automated and more responsive system, suppliers can quickly respond to the bids and buyers can assign the order to the best quote available to them. As the whole process is visible to all the parties, it saves time, ensures optimal costs and quick resolution of the grievances.

Benefits Realized – Effective evaluation of suppliers, real-time bidding, cost savings and healthy supplier relationship

4. Maintains a central repository for contracts – Your organization works with multiple suppliers. Most of the time, the terms and conditions remain the same while onboarding a new supplier or renewing the deal with an old supplier. With procurement automation, all your contracts can be kept in a central repository which is accessible through a single click. It helps in quick onboarding of new supplier and makes sure all the critical T&Cs and guidelines remain consistent across all the contracts

Benefits Realized – Availability of standard contract templates, reduces time and error in contract management

5. Increases Overall Productivity – With the entire process one-click accessible, the procurement staff can get the real-time update of the overall procurement cycle. In an automated system, all the stakeholders have more time to do strategic work as the manual process are cut off and they can get all the required information without navigating through multiple systems. It empowers their decision making and contributes to the productivity of the procurement function. As per a report by Hackett group, by standardizing and automating routing tasks, organizations can operate with 21% lower labor costs.

Benefits Realized – Increases efficiency, provides control of the procurement cycle

To know how Zycus’ can partner in procurement transformation journey of your organization, click here.


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