by martieLast Updated : Nov-16-2023
Are manual procurement processes causing your organization unwanted headaches?
True enough, it’s tiring to sift through paperwork and even handle costly errors because of manual processes.
Although the solution to this problem is simple, all your business needs to do is implement a procurement system.
In this blog, we will cover the game-changing solution of procurement systems. We will cover the most common questions on procurement systems, the types of procurement software you need, and even how to implement them effectively in your business.
By the end of this blog, you’ll clearly understand how procurement systems can benefit your bottom line.
Let’s dive in!
A procurement system is a software solution that helps your business manage and optimize your purchasing process.
This automates necessary tasks within your operations, such as supplier selection, contract management, purchase order creation, invoicing, and inventory management.
Using a procurement system for your business can help you improve efficiency, reduce costs, and ensure compliance.
A procurement system should have basic features such as:
A robust procurement system should have various features to streamline the procurement process and enhance overall efficiency within your business.
Here are key features that a comprehensive procurement system should ideally include:
The best procurement system will depend on your specific needs and requirements. Your business should carefully evaluate your procurement process and requirements before you select a procurement system for your company.
Did you know that procurement can be categorized into three primary types?
These are direct procurement, indirect procurement, and services procurement. Each of these types of procurement serves a specific need for your business.
Let’s briefly dive into each type of procurement one by one.
Direct procurement involves the acquisition of goods, services, or raw materials directly associated with the production of your company’s end product.
Example: In manufacturing, direct procurement would include purchasing raw materials, components, or parts needed for the production process.
Indirect procurement refers to the acquisition of goods and services that are not directly tied to the production of the final product but are essential for supporting your organization’s overall operations.
Example: Office supplies, IT services, or facility maintenance contracts fall under indirect procurement.
Services procurement involves acquiring various services your company requires to support your operations. This includes professional services, consulting, outsourcing, or service-related agreements.
Example: Hiring a consulting firm for business advisory services or contracting with an IT service provider for software development are examples of services procurement.
Learning these three types of procurement will help your organization strategically manage your spending. Aside from that, it also ensures that you acquire the necessary goods and services to operate efficiently.
Procurement systems can vary based on your organization’s specific needs and processes.
Here are the four common types of procurement systems that your organization may choose from:
E-Procurement systems leverage technology to automate and streamline the entire procurement process, from requisition to payment.
Here are the key features of an e-procurement system:
Cloud-based procurement systems are hosted on remote servers, allowing users within your company to access the platform via the Internet. This type of system offers scalability, flexibility, and reduced infrastructure costs.
Here are the key features of a cloud-based procurement system:
Integrated procurement systems are designed to seamlessly integrate with other enterprise systems, such as Enterprise Resource Planning (ERP) or Customer Relationship Management (CRM) systems.
This integration ensures data consistency and facilitates end-to-end business processes.
Here are the key features of an Integrated Procurement System:
On-premises procurement systems are installed and run on the organization’s servers and computing infrastructure.
This type of system provides full control over the software and data but requires a dedicated IT team for maintenance.
Here are the key features of an on-premise procurement system:
Your choice of a procurement system will depend on important factors your organization wants to consider, such as your company size, industry, budget, and other specific requirements.
Although, a lot of organizations today are moving towards electronic and cloud-based solutions for better efficiency and scalability!
The choice of a procurement system depends on factors such as the organization’s size, industry, budget, and specific requirements. Many modern organizations are moving towards electronic and cloud-based solutions for their efficiency, scalability, and cost-effectiveness.
ProcureDesk operates as a comprehensive procurement system by offering a range of features tailored to simplify and enhance the procurement process. Here’s how ProcureDesk works:
Ensuring an efficient procurement process hinges on simplifying the requisition process for employees. It’s not about merely digitizing a paper form; the goal is to streamline the purchasing experience for your staff.
With ProcureDesk, employees can initiate a purchase request with minimal clicks and data entry. The system identifies the user and leverages this information to establish default values for various parameters such as departments, classes, charts of accounts, projects, class codes, and more.
Here’s an illustration of how user defaults operate:
Upon approval of the requisition, you can dispatch the purchase order to the vendor, and this task can be automated through purchase order management software.
If you have a dedicated purchasing team, they may wish to evaluate various requisitions to identify potential cost-saving opportunities.
Effortlessly obtain price quotes from various vendors using the supplier quote module. Here’s an example of comparing the costs of servers from two different vendors:
Once you have completed the quote process, you can convert the quote to a purchase order and issue the purchase order to the vendor.
You don’t have to worry about changing purchase requests to purchase orders because of the automated purchase order creation.
This saves time, especially when you don’t have a purchasing team. You can determine which suppliers accept purchase orders, and the system can do the rest.
Here’s an example of a purchase order that ProcureDesk automatically creates.
You can customize the purchase order template to include additional fields.
If you want to explore the features of ProcureDesk further, we have a team of experts who can walk you through our tool. See it in action today!
Implementing procurement software involves a series of well-planned steps to ensure a smooth integration into your organization.
Here’s a simple guide to help you and your team implement your chosen procurement software:
Begin by evaluating your organization’s procurement needs. Identify key stakeholders and gather their input. Outline the specific goals and objectives you aim to achieve with the procurement software.
Research different procurement software options. Consider factors like features, user-friendliness, and compatibility with your existing systems. Choose a solution that aligns with your organization’s requirements.
Establish a budget for the procurement software implementation. Consider the initial costs and ongoing expenses, such as maintenance and support.
Plan training sessions for your team. Ensure that they understand how to use the new software effectively. This may involve tutorials, workshops, or online resources the software vendor provides.
Customize the software to match your organization’s specific needs. This may include configuring approval workflows, setting up user roles, and adapting the system to your procurement processes.
If transitioning from an existing system, migrate relevant data to the new software. Ensure a smooth transfer of information, including supplier details, purchase history, and other essential data.
Before a full-scale rollout, conduct a pilot test with a small group of users. This allows you to identify potential issues, gather feedback, and make necessary adjustments.
Once the pilot is successful, roll out the procurement software across the entire organization. Integrate the software with other relevant systems, such as ERP or accounting, to ensure seamless data flow.
Regularly monitor the performance of the procurement software. Gather feedback from users and make continuous improvements. This may involve updates, patches, or additional training sessions.
Create documentation, such as user guides and manuals, to help users navigate the new procurement system. This ensures that everyone has access to resources for reference.
Establish a system for ongoing support and maintenance. Work closely with the software vendor for technical assistance, updates, or bug fixes.
Periodically evaluate the effectiveness of the procurement software in meeting your organization’s goals. Use feedback and performance metrics to make informed decisions about the software’s continued use.
Effective communication and collaboration with your team throughout the implementation process are key to successfully integrating procurement software into your organization.
A procurement system for your business can offer many advantages, from accelerating processes to improving visibility, reducing errors, and enhancing supplier relationships.
Let’s quickly discuss the benefits of a procurement system that can bring an overall impact within your organization:
A procurement system streamlines the entire procurement process, reducing the time it takes to create, approve, and fulfill purchase requests. This leads to faster and more efficient procurement cycles.
Procurement systems provide enhanced visibility into the entire procurement lifecycle. Your business can easily track the status of requisitions, purchase orders, and deliveries, promoting transparency and informed decision-making.
A procurement system facilitates smooth and efficient business transactions by automating and optimizing procurement workflows. This efficiency extends to creating purchase orders, approvals, and supplier communication.
Automation in procurement processes significantly reduces the risk of manual errors. By minimizing human intervention in routine tasks, the system helps maintain data accuracy, reducing the likelihood of mistakes in orders and invoices.
Procurement systems often come with built-in compliance checks and guided buying features. This ensures purchasing activities adhere to your organization’s policies and industry regulations, minimizing non-compliance risks.
Procurement systems enable your organization to manage your relationships with suppliers more effectively. The system fosters stronger and more transparent relationships with your suppliers by providing a centralized platform for communication and collaboration.
If you’re looking for a procurement system for your business, here are some of the features you must look out for:
The punchout catalog feature with ProcureDesk allows users to establish a centralized marketplace with their preferred vendors.
Unlike traditional methods requiring constant price sheet updates or manual data entry from various vendor websites, ProcureDesk simplifies the process.
With punchout catalogs, users can seamlessly connect with major vendors such as ThermoFisher, Fisher Scientific, VWR, and more.
This integration eliminates the need for repetitive tasks like updating prices or copying and pasting data, ensuring users have real-time access to accurate product information and pricing directly within the ProcureDesk system.
[screenshot: procuredesk punchout catalogs]
Automated procurement systems are popular because they offer several benefits to businesses of all sizes, including:
Here is a brief overview of the different types of procurement automation software:
These are just a few different procurement automation software types available. The best type of software for a particular business will depend on its specific needs and requirements.
Without a doubt, a well-designed procurement system can be a game-changer for your business. It can provide you with a structured and efficient approach to acquiring the goods and services you need to operate.
With the right system, your business can navigate procurement complexities seamlessly, promoting cost savings, transparency, and overall operational excellence.
What you should do now
Whenever you’re ready… here are 4 ways we can help you scale your purchasing and Accounts payable process.