Streamline purchasing process with procurement software

2024-09-20

As businesses continue to grow, procurement processes need to be reorganized from time to time to maintain efficiency and accuracy. Without regular updates, procurement processes often encounter issues like errors, waste, overspending, and budget shortfalls, leading to high procurement costs. So, what are the key steps in procurement management?

To ensure fairness, transparency, and efficiency in procurement, it is essential to have a thorough understanding of the process. Each procurement process involves several key elements, including demand identification, supplier research, value analysis, purchase requests, review stages, purchase order conversion, contract management, monitoring/evaluating received orders, three-way matching, payment execution, and record-keeping. Here are the important stages of the procurement process:

1. Planning  
The demand identification stage allows businesses to create accurate plans to procure goods and services at the right time and at a reasonable cost.

2. Purchase Request  
A purchase request is made by internal users or customers to seek assistance from the procurement team in fulfilling a need. It contains the essential information needed to procure the correct goods, services, or projects.

3. Supplier Listing and Analysis  
Once the purchase request is approved and a purchase order is generated, the procurement team creates a personal procurement plan and outlines the bidding process. They also compile a list of potential suppliers. This process can involve simple online searches or more formal methods. The goal is to evaluate potential suppliers based on pricing, service quality, industry reputation, warranty terms, and customer service. After evaluation, the supplier offering the greatest value and best market price will be awarded the contract.

4. Evaluation and Contracting  
After the bidding process is formally concluded, the procurement team, together with the evaluation committee, will review and assess supplier quotes to determine the best fit for the current needs. Through detailed contract analysis and negotiation, more cost-saving opportunities may be uncovered, including dynamic discounts.

5. Order Management and Invoice Approval  
Suppliers deliver the promised goods or services within a specified time frame. Upon receipt, the buyer inspects the order and informs the supplier of any issues. In this step, three documents—the purchase order, packing slip (which accompanies the shipment), and supplier invoice—are aligned and verified to identify discrepancies and ensure transaction accuracy. Any discrepancies should be promptly addressed.

How Procurement Software Simplifies the Process

A reliable procurement management software can streamline complex procurement processes and maintain transparency. Simplifying procurement processes ensures better control over each stage of the procurement lifecycle.

8Manage SRM Procurement Software is an end-to-end, one-stop procurement management solution suitable for businesses of all sizes. It helps companies gain better insights into their spending, improves contract compliance, secures better prices, and reduces unnecessary expenses.

1. Easy Access and Real-Time Collaboration  
All procurement and supplier data are digitally stored in a centralized repository, making it easy to access during procurement. Buyers can view online catalogs from existing or new suppliers in real time, review and approve purchase orders, and check shipment status electronically.

2. Automation  
The electronic procurement system supports end-to-end procurement processes, covering everything from procurement budgeting, supplier management, item management, procurement needs, planning, price comparisons, bidding, contracts, purchase orders, shipments, payment settlements, to supplier performance evaluation. With the system, procurement progress can be monitored in real time, providing support for business decisions.

3. Supplier Management  
Using 8Manage SRMs analytical and business intelligence tools helps identify potential suppliers. The data collected can assist stakeholders in making informed decisions about future actions. For each transaction, the system automatically updates supplier performance information, making it easier to optimize suppliers effectively.

4. Order Management  
8Manage automatically generates purchase orders and tracks the entire execution process in real-time. All execution issues are traceable.

5. Contract Management  
The system provides an overview of contract renewals, allowing procurement staff to easily see all contracts that are due for renewal, saving time and effort.

Conclusion

Maintaining procurement processes over the long term ensures efficiency in every stage of the procurement cycle, thereby reducing procurement cycle times. Every business aims to benefit from streamlined procurement, and using procurement management software like 8Manage SRM helps companies quickly realize these benefits, ensuring the success of their procurement operations.