4 Steps to Automate your Procurement Course of

Automation has turn into a cheat code lately, with every enterprise perform bettering effectivity and transferring away from handbook, repetitive roles to extra strategic roles.

Think about a world the place your procurement course of runs like a well-oiled machine—no extra delays, no extra errors, and no extra limitless paperwork. Sounds too good to be true? Effectively, it’s not. Procurement automation at this time is certainly able to automating and streamlining every step of your procurement workflow.

On this weblog, we’ll stroll you thru 4 sensible steps to implement automation in your procurement course of.

Whether or not you’re a small enterprise trying to minimize prices or a big enterprise aiming to boost effectivity, this information will give you the actionable insights you want.

What’s Procurement Automation?

Procurement automation is using software program to streamline the procurement course of by automating duties corresponding to creating buy orders, approvals, bill processing, and speaking with suppliers.

Procurement automation at this time principally covers the next facets –

• automated buy order creation
• pre-defined approval checks
• streamlined approvals with notifications and monitoring
• bill knowledge entry and matching
• integration with procurement portal
• integration with ERP / accounting software program
• automated reconciliation

That is how an automatic procurement workflow appears like when built-in with a P2P automation software program like Nanonets.

The method begins with the necessity of a brand new buy.

1. Buy Request:

An worker logs into the Nanonets portal to submit a purchase order request digitally.

2. Buy Order Creation:

Nanonets mechanically creates a Buy Order (PO) based mostly on the main points offered within the request.

3. Buy Order Approval:

The PO undergoes an automatic approval course of inside Nanonets.

You’ll be able to set predefined guidelines and situations to make sure consistency throughout procurement actions, minimizing errors and stopping unauthorized expenditures.

Approval notifications are despatched and managed simply by way of widespread communication instruments like Slack and Microsoft Groups, that includes direct Name To Actions (CTAs) for fast decision-making.

4. Buy Order Dispatch:

As soon as authorized, the system mechanically sends the PO to the provider through built-in electronic mail or provider portals corresponding to SAP Ariba or Coupa.

5. Items or Providers Supply:

The provider processes the order and updates the supply standing within the provider portal, which syncs with Nanonets.

6. Bill Knowledge Seize and Matching:

Nanonets mechanically extracts knowledge from invoices, buy orders, and supply notes, lowering handbook entry and errors.

Automated three-way matching ensures accuracy by verifying the alignment of invoices, buy orders, and supply notes earlier than cost processing.

7. Fee Processing:

Nanonets streamlines the cost course of, making certain all transactions are accomplished effectively and on time.

This helps preserve good relationships with suppliers and keep away from late cost penalties.

8. Integration with ERP/Accounting Software program:

Nanonets integrates seamlessly with numerous ERP and accounting programs, offering a unified expertise for procurement and monetary knowledge administration.

Thus, it’s clear that procurement automation streamlines the acquisition course of and enhances the efficiency of your small business perform.

Listed here are some generally seen advantages of automation within the procurement course of:

• Price Discount: Automate repetitive duties to cut back labor prices and decrease errors.
• Effectivity Positive factors: Streamline approval and bill processing workflows to hurry up the procurement course of.
• Compliance Enchancment: Guarantee adherence to procurement insurance policies and requirements by way of automated checks and balances.
• Provider Relationship Administration: Improve communication and coordination with suppliers by way of automated programs.

Now let’s take a step-by-step take a look at how companies can go about automating their procurement workflow.

Step 1: Map your Present Procurement Course of

Step one needs to be to map out your present workflow. This may assist you localize inefficiencies, set clear targets based mostly on them, after which select the correct instruments for automation.

• Break down every activity into smaller elements.
• Establish who’s liable for every step.
• Notice any dependencies between duties.

Upon getting a transparent map of your present course of, the following step is to pinpoint the place issues are going flawed.

Inside every step, search for areas the place delays happen, errors are frequent, or assets are wasted.

These bottlenecks are sometimes prime candidates for automation. Widespread bottlenecks seen steadily are –

• Handbook knowledge entry errors.
• Time-consuming approval processes.
• Poor provider communication and coordination.
• Delays in bill processing and cost.

You may as well examine your procurement KPIs towards trade requirements to establish steps the place enchancment is required and viable.

Here’s a complete record of metrics you could think about monitoring, based mostly in your targets. Click on on every goal to discover potential KPIs.

Price Administration

Provider Efficiency

Course of Effectivity

Contract Administration

Stock Administration

Sustainability and Threat Administration

For instance, a mid sized manufacturing enterprise having a handbook procurement workflow upon self evaluation may give you the next workflow map and ache factors –

• Requisition Creation: Staff crammed out kinds which aren’t compliant with the procurement coverage within the first place
• Requisition Approval: Requisitions usually languished in approvers’ inboxes, inflicting vital delays.
• Buy Order Creation: Inconsistencies in PO codecs made it tough for suppliers to course of orders precisely.
• Provider Choice and Communication: Handbook processes led to frequent miscommunications and disputes with suppliers.
• Receipt of Items and Providers: Sluggish handbook inspection processes delayed the acknowledgment of receipt.
• Bill Processing: Handbook knowledge entry and matching of invoices to POs & items receipts resulted in frequent errors and delays.
• Fee and Reconciliation: Delayed funds strained provider relationships and typically resulted in penalties. Reconciliation is all the time a frightening activity at month-end.

Step 2: Set Clear Goals for Automation

The following step is to set clear and measurable targets in your automation efforts. Defining these targets will assist you focus your assets, observe progress, and measure the success of your automation initiatives.

Be sure the targets you set are SMART:

• Particular: Clearly outline what you need to obtain.
• Measurable: Set up standards for measuring progress and success.
• Achievable: Set reasonable targets which might be attainable given your assets.
• Related: Guarantee your targets align with broader enterprise targets.
• Time-bound: Set a deadline for attaining your targets.

Instance of SMART Objectives:

• Cut back Buy Order Cycle Time: Lower the typical buy order cycle time from 10 days to five days inside six months.
• Cut back Bill Processing Time: Cut back time spent in bill knowledge entry and matching by 70%.
• Enhance Provider Compliance: Obtain 95% compliance with procurement insurance policies amongst suppliers inside one 12 months.
• Enhance Knowledge Accuracy: Cut back knowledge entry errors by 80% by way of automation inside the subsequent quarter.

Your automation targets ought to assist your organization’s broader enterprise targets.

As an illustration, if your organization goals to cut back operational prices, an goal may very well be to automate bill processing to reduce handbook intervention and errors, resulting in price financial savings.

Step 3: Select the Proper Procurement Automation Software program

Choosing the correct procurement automation software program is a important step in your automation journey.

The correct device can streamline your processes, enhance effectivity, and ship vital price financial savings.

Listed here are the six components to contemplate –

1. Options and Performance: Make sure the software program has all the mandatory options to automate your particular procurement duties. Widespread options embrace buy order administration, provider administration, bill processing, and contract administration. Search for superior functionalities corresponding to analytics and reporting, integration capabilities, and customizable workflows.
2. Scalability: Select software program that may develop with your small business. As your procurement wants evolve, the software program ought to be capable to deal with elevated volumes and extra complexity.
3. Integration Capabilities: The software program ought to seamlessly combine along with your current programs, corresponding to ERP, accounting software program, and different enterprise purposes. This ensures knowledge consistency and improves total effectivity.
4. Consumer-Friendliness: The software program needs to be straightforward to make use of and navigate. A user-friendly interface reduces the training curve and will increase adoption charges amongst your workforce.
5. Vendor Assist and Coaching: Assess the extent of assist and coaching offered by the software program vendor. Good buyer assist and complete coaching applications can considerably improve the implementation course of and ongoing utilization.
6. Price: Think about each the preliminary price and the overall price of possession, together with licensing charges, implementation prices, and ongoing upkeep and assist bills. Make sure the software program affords good worth for cash.

Here is a take a look at six prime P2P automation options in 2024, together with their professionals and cons.

1. Nanonets 

Nanonets is a number one P2P automation software program recognized for its superior options, ease of use, and cost-effectiveness.

Professionals:

• Consumer-Pleasant Interface: Simple navigation reduces the training curve for brand spanking new customers.
• Correct Knowledge Seize: Excessive precision in capturing knowledge from invoices, buy orders, and supply notes.
• Actionable Approvals: Permits approvals inside instruments like Slack, Groups, and electronic mail, making them simply actionable with direct CTAs.
• ERP Integration: Seamlessly integrates with ERP programs, automating accounts payable processes.
• Price-Efficient: Reasonably priced for small to medium-sized companies.
• Validation and Approval Guidelines: Enforces preset validation guidelines and approval routing.

Cons:

• Lacks stock management, RFP, and bid processes.
• Superior options might require intensive coaching.

2. Coupa Procurement 

Coupa is well-regarded for its strong procurement administration capabilities, supreme for enterprises.

Professionals:

• Actual-Time Finances Administration: Tracks budgets and spending in actual time.
• AI and Machine Studying: Enhances error and fraud detection.
• Complete Suite: Consists of instruments for contract and provider administration, stock management, and e-invoicing.

Cons:

• Excessive price for smaller companies.
• Superior options might require vital coaching.

3. SAP Ariba 

SAP Ariba is ideal for big enterprises needing complete procurement and spend administration options.

Professionals:

• Integration with SAP S/4HANA: Seamlessly integrates with different SAP modules.
• Automated Provider Administration: Streamlines provider onboarding and efficiency administration.
• Actual-Time Knowledge Synchronization: Retains catalogs and provider knowledge up to date.

Cons:

• Excessive implementation price and time.
• Could also be too advanced for small to medium-sized companies.

4. Rossum 

Rossum makes use of AI to automate transactional doc processing, making it a robust P2P device.

Professionals:

• Superior AI and Machine Studying: Reduces handbook duties and errors in doc processing.
• Customizable Workflows: Permits tailor-made approval workflows.
• Integration Capabilities: Simply integrates with ERP programs like SAP, Coupa, and Workday.

Cons:

• Vital preliminary setup effort.
• Excessive price, particularly for smaller organizations.

5. Oracle Fusion Cloud Procurement 

Oracle Fusion Cloud Procurement affords a sturdy resolution for big companies aiming to automate procurement.

Professionals:

• Complete Options: Consists of provider relationship administration, contract administration, and automatic bill processing.
• Scalable: Appropriate for big enterprises with advanced wants.
• Fraud Discount: Sturdy approval processes and knowledge matching cut back fraud threat.

Cons:

• Complicated setup and ongoing administration.
• Not appropriate for small to medium-sized companies as a consequence of price and complexity.

6. Procurify 

Procurify is right for small to medium-sized companies in search of a versatile P2P resolution with restricted options.

Professionals:

• Ease of Use: Intuitive interface for simple adoption.
• Versatile Integrations: Works with widespread accounting programs like QuickBooks, Sage Intacct, and Microsoft Dynamics 365.
• Actual-Time Spending Insights: Offers real-time insights into spending for higher funds management.

Cons:

• Might not scale effectively for very giant enterprises.
• Lacks some superior options of extra advanced programs.

Choosing the proper P2P software program relies on your group’s dimension, procurement complexity, and funds.

Nanonets is superb for small to medium-sized companies, whereas Coupa and SAP Ariba are higher fitted to giant enterprises.

Consider these choices based mostly in your particular wants to search out the very best match.

Step 4: Implement a Procurement Coverage inside your Workflow

Implementing a procurement / expense coverage inside your workflow ensures consistency and compliance. The coverage serves as a tenet for all procurement actions – establishing standardized procedures and protocols that everybody in your group should observe.

Observe the beneath information to discover how you can create and optimize your expense coverage.

Expense Coverage 101: How one can Create & Implement your Coverage

An expense coverage dictates how staff can use firm funds. Study to craft an efficient expense coverage & course of to information worker spending.

As soon as the expense coverage is configured in your workflow, every buy is pre-checked towards the coverage guidelines and auto authorized/rejected based mostly on it.

You’ll be able to simply combine your coverage in procurement automation software program like Nanonets.

This reduces the redundant and sluggish approval work earlier completed manually, and permits a enterprise to strategically create and implement their procurement funds plan.

Conclusion

By adopting procurement automation, you possibly can anticipate substantial enhancements in price discount, effectivity positive factors, compliance, and provider relationship administration.

Automated workflows get rid of handbook knowledge entry errors, velocity up approval processes, and guarantee well timed funds, in the end fostering higher provider relationships and avoiding penalties.

For companies of all sizes, implementing procurement automation is a strategic transfer that helps development and scalability. Whether or not you are a small enterprise aiming to chop prices or a big enterprise searching for enhanced effectivity, the steps outlined on this information present actionable insights that will help you get began.