Gone are the days when procurement procedure and managing the suppliers were primarily restricted to a purchase system. In recent times, as the global economy has changed, procurement is now a deeper process.
Having a robust procurement management system helps a company in many ways. Streamlining the source-to-settle process is otherwise an onerous task. Automating the procurement system has got a number of benefits, both for the company as well as the owner.
Why Automation is required for the Procurement Department of a Company or an Enterprise?
Given the fast-paced era, a single disconnection in business systems and erred manual processes inflict unimaginable damages. Busy manufacturers are entirely dependent on the procurement department for a well-stocked warehouse, failing to which can result in untimely halt. This is where automation becomes so vital. Automation or digitization bestows a more strategic role to all the surrounding activities of procurement.
In simple terms, being on the top of each purchase made, manage the inventory, settle the scores with vendors – each demands immense time and effort from a business owner. It is thus constant chaos for the individual while juggling between all these. A robust ERP solution ensures the right level of stock, while also allowing to handle high-variable, low-mix intricacies. Eventually, the owner gets more free time to focus on other productive avenues, explore new business opportunities while sustaining the on-going business seamlessly.
During negotiations and contract signing periods, reviewers are quickly notified about any deviation from the standard lingo and required changes are made. Expiring contracts are notified that ensures timely renewals.
Now, if question arises as to how ERP, ‘specifically’ helps in procurement procedure, let's delve deep into the matter and find out how!
1. Give an Impetus to Profit Margins – When there's sync between purchase processes with the accounting system, one can duly avoid buying stock they already have in possession. Once a visibility is gained throughout warehouses and distribution centers, carrying costs can be reduced.
2. Customer Satisfaction is Increased – No more stress of backorders or shame of partial shipment delivery. These things contribute in losing valuable customers prospects. With an overall insight of your procurement and inventory ensures enough stock for your customers. You can offer your stock anytime they want, in any quantity they want.
3. Solidify Vendor/Supplier Liaison – Managing vendor/supplier data becomes way easy and hassle-free, when the procurement process becomes automated and cloud-based. One remains thorough about the delivery time of the vendors/suppliers, if anyone offers a more competitive pricing, or can provide better quality than the others.
All these analytics are received through the software that empowers a business owner to ensure faster delivery and also to maintain supreme quality. Prices, items purchase details, delivery dates and timing, and all the transaction details are on the tip of the owner through an ERP solution.
4. Adequate Purchase Planning – ERP software gives the necessary details of the products with higher margin, or the products that are more popular and those that are not. These insights enable a business owner to make the fair decision about purchasing the right product. One may appropriately avoid buying something not worthwhile, thus saving on the cost quotient.
Highlighting trending inventory/repository data is another significant feature of ERP-supported procurement process operations.
5. Ad Hoc Procurements are Diminished – No purchase can be made without a valid PO. Procurement systems where the processes are mostly manual, such unjustified instances are common. Automation negates these random situations, thus giving the management further authority over the procurement process. Not a single commodity is bought without a proper Purchase order in the system. The defaulter buyers can be show caused for their actions eventually.
6. A Proficient Mobile Workforce is Created – Given the paradigm shift towards everything mobile, businesses are also driven forward to digital media, where things are easier to handle than before. Hence, it is imperative for a management to leverage these devices to have a more efficient and competent workforce at their disposal.
ERP software factualizes this aspect and facilitates faster approvals, reduces latency, streamlines the procurement system, generates real-time analytics and documents; and finally enables the whole system to complete the tasks faster.
7. Tracking Performance of the Suppliers/Vendors and Improvement in Communication – ERPs generate a detailed track report of each of the vendors/suppliers, for making strategic decisions. These reports are based on the terms of delivery and rejection percentage, thereby concluding at a score. The scores are then updated in the ERP system which can be referred to in the future.
Also, communication gets further improved in an automated system, thus making the whole process more productive. The POs can be emailed to the suppliers/vendors, SMS alerts are sent for any purchase made, payment release, debit note, rejection of raw material, change of contract, etc.
This makes the whole process systematic and transparent that helps in building a long-term partnership with the vendors/suppliers.
The procurement process cycle is the core process of any business and needs a robust support. It is a fact that a hefty amount of the total cost of the company is consumed by purchase cost. So having the procurement process steady, making data-driven decisions, are paramount.
Businesses that wants growth and a complete control over their expenditure, must consider having an ERP supported procurement department. One can execute better inventory tracking, assigning different jobs, streamlining the purchase process, as well as reducing any material shortage. And with mobile devices, any duplicate data entry can be actively eliminated.
With improved and insightful features, ERP procurement processes have become the key driving force to make profit and improve customer satisfaction. If you want any question or query about how ERPs can drive maximum growth and ROI to your business, you may want to check Exactlly ERP and get all the answers.