Your department of procurement is undoubtedly essential as your organisation has faced numerous obstacles this year. The coronavirus pandemic has slowed manufacturing, hampered transportation links, and disrupted supply networks since February 2020. Many procurement teams have struggled to comprehend the effects of the pandemic. Those that already had sophisticated systems in place supported by automation were able to effortlessly overcome these hurdles.
Major procurement motions/tasks are repetitive, making them ideal for automation. Spend analysis, contract management, supplier bids, and, of course, purchasing and payment processes may all be automated to give substantial benefits to any company.
Here’s how procurement automation will help CPOs continue to lead.
Greater Cost Savings
The immediate benefit of an automated procurement function is lower costs due to its enhanced capacity to access a larger number of suppliers, calculate supply demands, and better manage contracts. Man hours will always be more important than machine hours.
Procurement Automation provides a comprehensive view of the procurement team’s operations, supporting the department in continually cutting costs and detecting areas where they appear to be excessive. Managers in charge of purchasing can utilise an automated way to confirm that the projected spending is indeed required. Meanwhile, the procurement team can use previous data on supplier spending to help them negotiate lower buy rates.
Reduced Off Contract Spends
An automated procurement system consolidates all of your supplier contracts and information, as well as all of your catalogues, making it easier for business stakeholders to purchase the items they require. There’s less reason for buyers to try to find products off-contract or from unvetted vendors now that everything is easily accessible online.
Spending on better performing assets
As we mentioned above, man hours are more important than machine hours.
That directly means spending more on incentives for man hours will directly help you increase their performance.
There is less tail spend and more activity controlled by the procurement team as there are fewer off-contract and non-catalog acquisitions. Procurement teams are frequently more motivated to concentrate on their organization’s larger, multi-year contracts, where they can save the most money. However, because tail spending and uncontrolled spend account for up to 80% of all transactions, this concentration can ignore approximately 20% of a company’s budget. This can be a huge drain on the resources of a corporation. More spend is brought under the control of the procurement team as a result of automation, lowering the possibility and impact of tail spend.
With automated procurement software, you have access to supplier and cost information at your fingertips. Tracking orders becomes much easier when all of the information for a transaction is in one place. Furthermore, the data obtained offers you greater transparency up and down your supply chain, giving you both a real-time perspective and a more in-depth assessment of the overall health of your supply chain. By exchanging data with your suppliers, you can also gain insight into next-tier suppliers and upstream value chains.
When the Procurement Technology is automated, the order process speeds up, resulting in shorter timelines and increased efficiency. Automation aids CPOs in better resource management. Managers can use automation to deploy team members where they are most needed, rather than assigning them mundane low-priority jobs that can be performed by automation. It also enhances communication with vendors as well as internal stakeholders. For example, the finance department will receive faster and more accurate reports, purchasers in other departments will know where their order is, and the C-suite will be able to make strategic business decisions based on smart data. Automating the procurement function provides numerous advantages to any firm. Cost savings increase while off-contract and non-catalog spending decrease. More activity, including tail spend, can be managed, and the procurement team has far greater insight over all of its responsibilities, allowing it to better minimise risk and maximise efficiency and resources.
In the reality of 2020, the list of supply chain hazards appears to grow by the day—mass healthcare catastrophes, geopolitical risks, climate change, and economic system shocks. However, more visibility leads to a better understanding of your procurement environment. An automated procurement function assists you in anticipating where the next danger may arise and preparing accordingly. How? For one thing, the data available from an automated supply chain allows you to identify high-risk spend and supplier concentrations more rapidly. With this knowledge, you may reduce the risk of the procurement function by providing alternate suppliers.
When we talk about procurement technology or procurement software, there are a large number of benefits which can and will drive your organization to a more efficient system of procurement. After all, it is a collective effort of working towards efficiency with the help of tools and the latest technology to support teams of people procuring resources to drive better results.
To know more about how India’s best procurement software will help you drive business growth, visit www.procol.io.