4 Steps to Automate your Procurement Course of

Automation has change into a cheat code in recent times, with every enterprise operate bettering effectivity and shifting 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 infinite paperwork. Sounds too good to be true? Nicely, it’s not. Procurement automation at the 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 trying to lower 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 the usage of software program to streamline the procurement course of by automating duties akin to creating buy orders, approvals, bill processing, and speaking with suppliers.

Procurement automation at the moment principally covers the next points –

• 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 seems to be 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 robotically creates a Buy Order (PO) primarily based on the main points supplied within the request.

3. Buy Order Approval:

The PO undergoes an automatic approval course of inside Nanonets.

You possibly can 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 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 authorised, the system robotically sends the PO to the provider through built-in electronic mail or provider portals akin 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 Information Seize and Matching:

Nanonets robotically extracts knowledge 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 cost processing.

7. Cost Processing:

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

This helps keep 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 online 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 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 via automated checks and balances.
• Provider Relationship Administration: Improve communication and coordination with suppliers via 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. It will enable you localize inefficiencies, set clear aims primarily based on them, after which select the appropriate instruments for automation.

• Break down every process into smaller parts.
• 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 incorrect.

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

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

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

You can too examine your procurement KPIs towards business requirements to determine steps the place enchancment is required and viable.

Here’s a complete checklist of metrics that you may contemplate monitoring, primarily based in your aims. Click on on every goal to discover potential KPIs.

Price Administration

Provider Efficiency

Course of Effectivity

Contract Administration

Stock Administration

Sustainability and Danger Administration

For instance, a mid sized manufacturing enterprise having a guide procurement workflow upon self evaluation would possibly provide you with the next workflow map and ache factors –

• Requisition Creation: Workers crammed out varieties 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 tough 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: Gradual guide inspection processes delayed the acknowledgment of receipt.
• Bill Processing: Guide knowledge entry and matching of invoices to POs & items receipts resulted in frequent errors and delays.
• Cost and Reconciliation: Delayed funds strained provider relationships and typically resulted in penalties. Reconciliation is all the time a frightening process at month-end.

Step 2: Set Clear Aims for Automation

The following step is to set clear and measurable aims in your automation efforts. Defining these targets will enable you focus your sources, monitor progress, and measure the success of your automation initiatives.

Make sure that the aims you set are SMART:

• Particular: Clearly outline what you wish to obtain.
• Measurable: Set up standards for measuring progress and success.
• Achievable: Set real looking targets which can be attainable given your sources.
• Related: Guarantee your targets align with broader enterprise aims.
• Time-bound: Set a deadline for reaching your targets.

Instance of SMART Targets:

• Scale back Buy Order Cycle Time: Lower the typical buy order cycle time from 10 days to five days inside six months.
• Scale back Bill Processing Time: Scale 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 yr.
• Enhance Information Accuracy: Scale back knowledge entry errors by 80% via automation throughout the subsequent quarter.

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

For example, if your organization goals to scale back operational prices, an goal might be to automate bill processing to attenuate guide intervention and errors, resulting in value financial savings.

Step 3: Select the Proper Procurement Automation Software program

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

The fitting software can streamline your processes, enhance effectivity, and ship important value financial savings.

Listed below are the six components to contemplate –

1. Options and Performance: Make sure the software program has all the required options to automate your particular procurement duties. Widespread options embrace buy order administration, provider administration, bill processing, and contract administration. Search for superior functionalities akin to analytics and reporting, integration capabilities, and customizable workflows.
2. Scalability: Select software program that may develop with your online 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 programs, akin to ERP, accounting software program, and different enterprise purposes. This ensures knowledge consistency and improves general 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 supplied by the software program vendor. Good buyer assist and complete coaching applications can considerably improve the implementation course of and ongoing utilization.
6. Price: Take into account each the preliminary value and the whole value of possession, together with licensing charges, implementation prices, and ongoing upkeep and assist bills. Make sure the software program provides good worth for cash.

This 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 identified for its superior options, ease of use, and cost-effectiveness.

Execs:

• Consumer-Pleasant Interface: Simple navigation reduces the training curve for brand new customers.
• Correct Information 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 could require intensive coaching.

2. Coupa Procurement 

Coupa is well-regarded for its sturdy procurement administration capabilities, splendid for enterprises.

Execs:

• Actual-Time Price range 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 value for smaller companies.
• Superior options could require important coaching.

3. SAP Ariba 

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

Execs:

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

Cons:

• Excessive implementation value 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 software.

Execs:

• 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 programs like SAP, Coupa, and Workday.

Cons:

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

5. Oracle Fusion Cloud Procurement 

Oracle Fusion Cloud Procurement provides a strong resolution for giant companies aiming to automate procurement.

Execs:

• Complete Options: Contains provider relationship administration, contract administration, and automatic bill processing.
• Scalable: Appropriate for giant enterprises with advanced wants.
• Fraud Discount: Robust approval processes and knowledge matching scale back fraud danger.

Cons:

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

6. Procurify 

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

Execs:

• 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: Gives real-time insights into spending for higher price range management.

Cons:

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

Selecting the best P2P software program is dependent upon your group’s measurement, procurement complexity, and price range.

Nanonets is great for small to medium-sized companies, whereas Coupa and SAP Ariba are higher suited to massive enterprises.

Consider these choices primarily based in your particular wants to search out the most effective 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.

Observe the beneath information to discover easy methods to create and optimize your expense coverage.

Expense Coverage 101: The right way 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 authorised/rejected primarily based on it.

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

This reduces the redundant and sluggish approval work earlier carried out manually, and permits a enterprise to strategically create and implement their procurement price range plan.

Conclusion

By adopting procurement automation, you may count on substantial enhancements in value discount, effectivity positive factors, compliance, and provider relationship administration.

Automated workflows remove guide knowledge 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 progress and scalability. Whether or not you are a small enterprise aiming to chop prices or a big enterprise looking for enhanced effectivity, the steps outlined on this information present actionable insights that will help you get began.