4 Steps to Automate your Procurement Course of

Automation has turn into a cheat code lately, with every enterprise operate bettering effectivity and transferring away from guide, 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 countless paperwork. Sounds too good to be true? Nicely, it’s not. Procurement automation right this moment 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 seeking to lower prices or a big enterprise aiming to reinforce effectivity, this information will offer 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 comparable to creating buy orders, approvals, bill processing, and speaking with suppliers.

Procurement automation right this moment mainly covers the next features –

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

That is how an automatic procurement workflow appears to be like 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 may 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 via fashionable 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 accredited, the system mechanically sends the PO to the provider by way of built-in electronic mail or provider portals comparable to SAP Ariba or Coupa.

5. Items or Companies 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 information from invoices, buy orders, and supply notes, decreasing guide entry and errors.

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

7. Fee Processing:

Nanonets streamlines the fee course of, guaranteeing all transactions are accomplished effectively and on time.

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

8. Integration with ERP/Accounting Software program:

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

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

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

• Price Discount: Automate repetitive duties to scale back labor prices and reduce 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 via automated checks and balances.
• Provider Relationship Administration: Improve communication and coordination with suppliers via automated methods.

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 ought to be to map out your present workflow. This may show you how to localize inefficiencies, set clear targets based mostly on them, after which select the fitting instruments for automation.

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

After getting a transparent map of your present course of, the subsequent step is to pinpoint the place issues are going improper.

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 often are –

• Guide information entry errors.
• Time-consuming approval processes.
• Poor provider communication and coordination.
• Delays in bill processing and fee.

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 checklist of metrics that you could take into account 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 guide procurement workflow upon self evaluation may provide you with the next workflow map and ache factors –

• Requisition Creation: Workers crammed out types which aren’t compliant with the procurement coverage within the first place
• Requisition Approval: Requisitions typically languished in approvers’ inboxes, inflicting important delays.
• Buy Order Creation: Inconsistencies in PO codecs made it troublesome for suppliers to course of orders precisely.
• Provider Choice and Communication: Guide processes led to frequent miscommunications and disputes with suppliers.
• Receipt of Items and Companies: Sluggish guide inspection processes delayed the acknowledgment of receipt.
• Bill Processing: Guide information entry and matching of invoices to POs & items receipts resulted in frequent errors and delays.
• Fee and Reconciliation: Delayed funds strained provider relationships and generally 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 to your automation efforts. Defining these targets will show you how to focus your assets, monitor progress, and measure the success of your automation initiatives.

Make certain 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 life like targets which are attainable given your assets.
• Related: Guarantee your targets align with broader enterprise targets.
• Time-bound: Set a deadline for reaching your targets.

Instance of SMART Targets:

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

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

As an example, if your organization goals to scale back operational prices, an goal could possibly be to automate bill processing to attenuate guide intervention and errors, resulting in price financial savings.

Step 3: Select the Proper Procurement Automation Software program

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

The proper software can streamline your processes, enhance effectivity, and ship important price financial savings.

Listed below are the six elements to contemplate –

1. Options and Performance: Make sure the software program has all the mandatory options to automate your particular procurement duties. Widespread options embody buy order administration, provider administration, bill processing, and contract administration. Search for superior functionalities comparable 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 together with your current methods, comparable to ERP, accounting software program, and different enterprise functions. This ensures information consistency and improves general effectivity.
4. Consumer-Friendliness: The software program ought to be straightforward to make use of and navigate. A user-friendly interface reduces the educational curve and will increase adoption charges amongst your group.
5. Vendor Assist and Coaching: Assess the extent of help and coaching offered by the software program vendor. Good buyer help and complete coaching applications can considerably improve the implementation course of and ongoing utilization.
6. Price: Contemplate each the preliminary price and the overall price of possession, together with licensing charges, implementation prices, and ongoing upkeep and help bills. Make sure the software program gives good worth for cash.

This is a take a look at six high 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: Straightforward navigation reduces the educational curve for brand new customers.
• Correct Knowledge Seize: Excessive precision in capturing information 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 methods, 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 could require in depth coaching.

2. Coupa Procurement 

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

Professionals:

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

Cons:

• Excessive price for smaller companies.
• Superior options could require important 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 information up to date.

Cons:

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

4. Rossum 

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

Professionals:

• Superior AI and Machine Studying: Reduces guide duties and errors in doc processing.
• Customizable Workflows: Permits tailor-made approval workflows.
• Integration Capabilities: Simply integrates with ERP methods 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 gives a sturdy answer for big companies aiming to automate procurement.

Professionals:

• Complete Options: Contains provider relationship administration, contract administration, and automatic bill processing.
• Scalable: Appropriate for big enterprises with complicated wants.
• Fraud Discount: Sturdy approval processes and information matching cut back fraud danger.

Cons:

• Advanced setup and ongoing administration.
• Not appropriate for small to medium-sized companies on account of price and complexity.

6. Procurify 

Procurify is good for small to medium-sized companies searching for a versatile P2P answer with restricted options.

Professionals:

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

Cons:

• Might not scale nicely for very giant enterprises.
• Lacks some superior options of extra complicated methods.

Selecting the best P2P software program depends upon your group’s measurement, procurement complexity, and finances.

Nanonets is great 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 one of the 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 suggestion for all procurement actions – establishing standardized procedures and protocols that everybody in your group should observe.

Comply with the beneath information to discover learn how to create and optimize your expense coverage.

Expense Coverage 101: Find out how to 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 accredited/rejected based mostly on it.

You may simply combine your coverage in procurement automation software program like Nanonets.

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

Conclusion

By adopting procurement automation, you’ll be able to count on substantial enhancements in price discount, effectivity good points, compliance, and provider relationship administration.

Automated workflows remove guide information entry errors, pace 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 in search of enhanced effectivity, the steps outlined on this information present actionable insights that can assist you get began.