In the digital world, it’s surprising to see just how many businesses are still using manual procurement processes. Organizations across the world are still using spreadsheets that are time-consuming, error-prone, expensive and inefficient. The solution to these woes is in the utilization of procurement software.
Manual processes are holding businesses back and costing them in a way they often don’t realize.
Tracking down vendor information in email chains or through multiple spreadsheets, reviewing contracts, and manual sourcing all take a toll on the efficiency of employees and the procurement department as a whole. To solve these issues, organizations can leverage e-procurement software that automates time-consuming tasks and creates a centralized location for purchasing decisions.
Too many files and too much paper can result in messy documentation. When contracts are stored in hard copy or PDF, it’s difficult to access the details of the contract, including negotiated terms and conditions. The result is far too much time spent looking for documents, or the info and details within those documents.
Investing in procurement software solutions means no more hard copies and no more PDFs of important information. Instead, everything is stored in one place, making it easy to find, exactly when you need it.
Missed Savings Opportunities
When you speed up tasks like creating invoices and vendor selection, you can make faster and more valuable decisions. Automating processes means that your staff can focus their energy on other tasks, such as building beneficial vendor relationships.
No Centralized Location
When you use a manual procurement process, you don’t have a go-to source of data and information. Without this location for information about suppliers, the purchasing department must go through various internal and external sources to find the information they need.
Decentralized tools mean that the staff doesn’t have a whole lot of visibility into the procurement process, which can lead to savings leakage and risk. Often, the details get overlooked, and communication begins to break down between the procurement team and customers or suppliers.
With purchase order software for small businesses, you can more easily store and find information in one easy to use platform.
When you get down to it, a manual process isn’t efficient. When a part of your business is inefficient, your business itself is not as efficient as it could be. Inefficiency leads to your business losing money. For every simple task that ends up taking tons of time out of your employee’s day, your business is losing money.
You can avoid losing money when you automate the procurement process with online procurement management software that allows anyone involved in the procurement function to easily and quickly find the information they need.
Depending on your business needs, investing in procurement software is a big decision. Many businesses believe that manual processes are cheaper, but when it comes down to how much time is being wasted, that assumption just simply isn’t true.
Now that you know the risks of continuing to use a manual, spreadsheet-based procurement process, let’s discuss the advantages of procure to pay software for small businesses.
Eliminate Paper-based Systems
Paper-based systems are time-consuming and can lead to confusion. Purchase order software creates electronic purchase orders with all of the necessary information automatically. Those purchase orders are then accessible in real-time from anywhere when using a smartphone or computer.
Purchasing Based on Your Policies
The automation of a cloud-based procurement solution makes it easy for you to create hierarchies and rule-driven workflows to ensure your purchase orders are accurate and comply with your (and your vendor’s) policies.
With less busywork comes productivity. Task automation requires little to no human intervention and provides routes and alerts for approval workflows, automatic collection, and cross-referencing of transaction data. By boosting productivity, you can free up time for your employees to focus on more important tasks.
With a pre-selected vendor list and integrated inventory and contract management, procurement solutions make compliance easier. There will be no more duplicate orders or invisible spend.
Automated procurement platforms boost purchase order processing speed and improving workflows. The purchasing process that may have taken days will now be condensed into just a few hours.
Streamlining the purchasing process results in significant cost savings. Less time and fewer resources required for procurement mean that you can save money and spend it in other areas of your business.
Actionable data is stored securely on the cloud for easy analysis. You can quickly gain insights into the potential issues in your workflows, create financial reports and budgets, and even identify areas of potential in your supply chain.
E-procurement solutions structure spend across vendors and provides detailed tracing information. This spend management allows you to track cost reductions continuously and identify gaps.
Purchase order software integrates with your accounting software to create purchase orders and invoices with just a few clicks of a button.
You can harness your business’ potential by using automation to increase the efficiency of your procurement process. By integrating a purchase order system that meets all of your business needs, you can expect higher levels of productivity, efficiency, and a better bottom-line than ever before.
Bellwether’s solutions mean that your procurement department will never drop the ball again, lose valuable paperwork, or get lost in the mess of manual operation. Instead, use the time saved to invest in building relationships that can result in even more cost savings.
Discover exactly how (and how much) Bellwether can save your business money with our new procurement ROI calculator.
Contact us today to learn how automation is the key to the success of your procurement function.
If you run a small business, you’re probably using QuickBooks accounting software – at least in some capacity – to keep track of your finances. You may know that QuickBooks, no matter which version you are using, has a basic purchase order system that lets you create and track your purchase orders. While this feature is extremely helpful and convenient, you’ll see that as your business grows, so does your need for a more robust purchasing system.
What many businesses really need is powerful purchasing and inventory software that allows them to handle the procurement process in a single, easy-to-use platform. When you integrate Bellwether with Quickbooks, you can expect more efficient purchase order management and customizable approval workflows that streamline all aspects of the purchasing function.
No matter which version of QuickBooks you are using, you are able to:
While this may be enough for a business just starting out or for specific business models, it does not create an efficient purchasing function for small businesses with broad inventories, or for those who plan to grow and require more powerful purchasing and inventory functions.
QuickBooks offers a basic inventory tracking function, however, it is not as robust as many businesses need. At the basic level, tracking your inventory can actually cost your business valuable time and money.
Bellwether’s software syncs with QuickBooks to track inventory across multiple warehouses and locations. This allows you to run your operations in less time and eliminate costly errors, which improves your inventory process, lowers your overall costs, and increases your profits.
Bellwether inventory management software extends the basic accounting features of Quickbooks to give users the ability to synchronize inventory items, vendors, purchase orders, and invoices.
Controlling Your Spend
Maverick spending gets a lot of businesses in trouble. Often times, the procurement department is using manual processes to keep track of their inventory, which can lead to items being checked out and not reported or mysteriously going missing. This can lead to unnecessary spending and bad purchasing decisions because the purchasing department simply doesn’t know what they do and do not have in stock.
By syncing QuickBooks and Bellwether, it’s easier to understand your inventory and know what you need to order and when. You can even plan for the future and uncover how often certain items need to be reordered.
When you create a purchase order, you need the ability to create an invoice with the exact same information. This process can be time-consuming and unnecessary with the use of purchasing software for small businesses. By syncing Bellwether with QuickBooks purchase order software, you can match invoices against purchase orders and delivery slips to ensure the accuracy of your invoice processing.
Unnoticed mistakes happen all the time in a fast-paced, busy office, especially when documentation isn’t properly cross-checked, such as invoices and purchase orders to ensure proper pricing, and the correct number of items. Never let mistakes go unnoticed again – start using a better procurement function that allows your staff to quickly and easily check delivery slips, invoices, and purchase orders. Minimize mistakes and losses while maximizing gains.
Eliminate Manual Processes
When you first started your business, the manual processes you used may have been effective enough. However, you’ve most likely realized that you are spending too much time searching for the correct documentation, or creating purchase orders and invoices that match.
With Bellwether’s cloud-based procurement software, you can create purchase orders in QuickBooks and store all of your data and documents in one system. You can then access your data quickly and easily from virtually anywhere using a computer or smartphone.
Eliminating paper or spreadsheet-based processes will allow you to handle the procurement function more easily and eliminates the potential for human error. If you like paper documents, you can always print out your procurement records for your own safekeeping as well.
In most businesses, purchases need to be approved based on funds. Often, that means sending a request for a purchase order to the finance department and waiting for approval. This is typically where a breakdown in workflow occurs.
Instead of waiting for someone to approve the workflow when you are using just the QuickBooks purchase order feature, Bellwether allows you to set criteria for approvals based on a specific budget. From there, the procurement staff can create a purchase order inside QuickBooks for which the items have already been approved and send it to the supplier. This reduces time, and improves the overall workflow and order efficiency.
Manage Supplier Contracts
While in QuickBooks, you can view the prices and certain information on the purchase order, but you cannot view the supplier contracts. These contracts are important for any business as they lay out the terms that the supplier must follow in regards to quality, delivery, and quantity.
As you know, when a supplier doesn’t follow the terms of their contract, your business is put in a sticky situation that can end up costing you even more time and money. Bellwether allows you to match invoices with purchase orders and manage supplier contracts easily so that you know exactly which vendors are the best for your business.
The purchasing process is much easier when you have the items you wish to purchase right in front of you. You will typically receive catalogs from vendors that list their products and details. Businesses using manual processes will need to store these catalogs for future use. QuickBooks does not offer a feature for inputting information from catalogs for you to see and find more easily in the future.
However, with Bellwether, you can store vendor catalogs for easy access in the future. From there, you can search for specific vendors or items and create a purchase order in QuickBooks using the information that has already stored.
Bellwether fits into your current workflow by integrating with the software you already use. Automation is key to the success of your purchase order process.
QuickBooks offers a few automations to help make your purchasing process more efficient. However, when it comes to the greater process of procurement, you need software that can do everything in one simple and easy to use interface. Remember, QuickBooks is accounting software, not procurement software.
Businesses are rapidly realizing that manual processes and spreadsheets are not efficient or effective enough for maintaining a successful organization, or optimizing profits.
To learn more about how procurement software can increase the efficiency of your business and save you money, contact Bellwether today.
The business structure continues to evolve, making inventory management and procurement much more important. Procurement is related to many business activities and is one of the main daily tasks that must be completed correctly.
While inventory and procurement may seem like simple tasks to an outsider, business owners know that they still pose many challenges. However, those challenges can be reduced or eliminated by utilizing effective inventory and purchase order software.
Many businesses are still using manual processes for their procurement function. Using spreadsheets and paperwork complicates the process and can lead to a multitude of mistakes.
To err is human, but errors in the procurement process can be detrimental for a business. They can lead to unnecessary spending and also cause problems with valuable suppliers.
Approvals are one aspect of the procurement process where workflows begin to break down. Human workers and management get busy and can’t always take the time to approve purchases on a daily basis.
Your business will always need suppliers who can fulfill your product criteria. Often, businesses lack a list of suppliers that can help them get the right inventory, and build valuable relationships.
Going Over Budget
You may end up going over budget if you wait until the last minute to make purchases. You can also go over budget by purchasing products you don’t need because your purchasing function isn’t effective. Ordering excess stock will continue to push your costs.
Each and every one of these issues can easily arise due to a lack of automation.
Robust, user-friendly procurement software will offer features that improve the procurement function’s efficiency.
Monitor Inventory Lifecycle
For inventory control, it’s necessary to have appropriate management strategies. You need to make sure that you can restock the items on time so your operations don’t face a delay.
Inventory software allows you to run lifecycle management practices. These practices will help you get an idea of the life of inventory. They also let you know when something needs to be replaced.
You never want a worker to reach for something that isn’t there. Inventory management software allows you to uncover when you’ll need to reorder particular inventory items, often before they’re depleted.
Record Usage History
Usage history will allow you to predict future consumption of inventory. As your business grows, you may need to change your inventory portfolios and budgets. A cloud-based system can record the usage history of your products, tools, and machines. This allows you to build upon the current usage and forecast your future demands accurately.
Effective Supplier Management
Optimizing your procurement function means having a robust supplier management system. You can store all your supplier information using e-procurement software with a database that allows you to easily record and retrieve important supplier information and contract terms.
Automate Purchase Orders
If you have your suppliers’ information recorded in a procurement software system, you can easily generate a purchase order at any time, with minimal effort.
Increasing procurement efficiencies means taking a daily task and making it simpler and simultaneously more effective. One of the best ways to increase purchase efficiencies is to optimize the purchase order cycle time.
The procurement cycle is the total time a transaction takes from the requisition to the delivery and payment in full. This cycle time is a key performance indicator (KPI) that can be used to measure the productivity and efficiency of your procurement function.
The KPI measures the average amount of time it takes for a requisition to generate a purchase order and send it to the supplier. Reducing the PO cycle time will lower the immediate expenses for every purchase while reducing the cost of the procurement function itself.
To optimize the PO cycle, you must first understand its workflow. While your company may be unique and different from all of the rest, the average PO cycle follows this path:
Step 1: Generating a Purchase Order
A member of the procurement team will generate a purchase order after the requisition is approved.
Step 2: Approvals
The finance department will then review the budget for the requested items and ensure that funds are available. Procurement staff may also send requests for proposals to potential suppliers for them to submit quotes.
Step 3: Supplier Review
The procurement team reviews and compares the bids and confirm the winning bid with stakeholders.
Step 4: PO Submission
The purchasing department may negotiate with the supplier for terms, price, and quality of goods. Afterward, procurement sends the purchase order to the supplier, and it becomes a legally binding contract between the two parties.
Step 5: Review of Deliveries
Once items are delivered, the procurement team reviews the items against the terms before sending payment to the supplier.
Automation streamlines your purchase order cycle time and the purchasing process as a whole. As your business grows and expands, procurement can become complex and demand more resources, more time, and additional talent.
Cloud-based procurement software solutions use automation to trim time, expenses, and stress from your procurement department. The benefits are primarily from the reduction of human error along with increased efficiency. Thanks to simplicity and productivity, staff can dedicate their time to more valuable tasks.
Businesses who switch from manual to automated processes can decrease hours or even days from the purchase order cycle. Automation can remove roadblocks and streamline the entire procurement process.
Automation also cross-connects all transactional data with related documentation. Each PO is automatically matched with its corresponding invoice, shipping documents, correspondence, and profile information, including the contract terms.
When you increase the efficiency of any part of your business, you are going to save money. Efficiency equates to cost savings because you are reducing the number of hours needed to complete a task. Not only that, but when you reduce or eliminate human error, you can further decrease unnecessary spending.
Want to know how much money your business can save by switching to an automated procurement system? Check out our ROI Calculator right now. Using basic information from your procurement process, we can easily calculate and show you just how much money your business can save.
Organizations are quickly realizing that real-time data is the key to success. It can help enhance the customer experience and provide valuable insights for businesses. Real-time data can also transform a business’ purchasing experience, making it more efficient and more effective, and helping to reduce costs. Using e-procurement software, you can maximize productivity and minimize losses using data. Here’s how real-time data can be used to benefit your organization’s purchasing process.
With procurement management software, you can upload catalogs in one place so that you can compare prices and get the best bang for your buck. All you have to do is use the data that is punched in so that the software can comparison shop all of the options available from your network of suppliers. All of this information is then shown to you in one area. Your suppliers will not need to make any investments of their own to be connected to you. Also, your employees will no longer need to search through physical catalogs to price compare.
Real-time data can also integrate product descriptions and data from online search results. This data will give up to the minute price options so that you can compare recent prices without the need to contact your suppliers directly.
Real-time data can drive savings by securing the best deals for your business. It tracks your organization’s purchase history and supplies useful analytics to determine the competitiveness of current negotiated supplier pricing in comparison with competitors. This information is provided up to the minute in comprehensive reports so that you have actionable information that allows you to better negotiate with suppliers.
Discounted prices should be reflected at the time of purchase to make a well-negotiated contract. Your team works hard to negotiate agreements and terms with suppliers, but it is often challenging to ensure that they are compliant. Expensive and time-consuming audits are done to identify and recapture any transactional errors that may have occurred that are a breach of contract. This not only delays orders but requires manual interventions and reorders.
Real-time data lets users discover off-contract pricing and products before the process immediately so that you don’t pay for something that is wrong. You won’t need an expensive, drawn-out audit to discover discrepancies anymore.
When you have advanced, real-time capabilities, your sales channel becomes more attractive to suppliers. Your employees will be able to browse and search catalogs and websites much more easily and from one private marketplace. As user purchasing increases through that marketplace, the supplier sales will increase. This will lead to contract negotiations that benefit both your procurement process and the suppliers to create a truly mutually beneficial relationship that will drive cost savings.
Remember, your supplier relationship goes both ways. Your procurement process affects them, too. If your supplier ships an order and doesn’t receive payment, you will damage a crucial relationship. People in the same industry talk, so protecting your reputation is essential.
Compliance is another major factor when it comes to these relationships. Both parties must follow the terms in the contract. Data will help you determine whether or not you are complying with their terms to make sure the relationship isn’t one-sided.
By making your process more efficient with data, you can quickly and effectively manage the relationships that your success depends on.
Real-time price validation of items before an order transaction is complete will remove the potential order issues downstream in the procure to pay process. This will increase the speed of processing and reduce manual labor costs. Automation will take repetitive tasks and do them in real-time to help employees focus on more time-consuming tasks. The data is also used to reduce any human error that can happen when you are using manual processes. The wrong number can cost your business.
Your real-time purchase system will use prices from the catalogs and input them into PO’s for you so that you don’t run the risk of losing money.
Real-time data will allow you to refine your procurement process. If you are using manual methods, such as spreadsheets, you will see a drastic improvement across your operation. You will also be able to see analytics that show you which areas need improvement. You can first look at which part of the process takes the most time and find out why. Maybe the approval process is holding your business up. However, with real-time data, you can automate your approval process so that you’re not waiting for one busy person. Make sure to talk to everyone involved in the procurement process to find out which areas need improvement.
Once you have refined your process, make sure to share it with all of the employees involved in procurement so that they can change the way they do their job.
Let’s be honest. The most significant benefit your company will see is cost savings. Efficiency means that more work is getting done in a single workday, helping you save money each day you utilize real-time data.
You may think that using your cheaper, manual processes is the most inexpensive way to run your business. However, that simply isn’t true. Both free and more robust procurement software can help your employees save time and in turn, help your business save money.
SMBs can all benefit from e-procurement software no matter how robust it is because they simply automate your processes and increase your workflows to provide a simpler, more efficient purchasing experience.
Business intelligence (BI) is all about data that can be used to improve business functions. One is the procurement functions, which is integral part of corporate performance. Procurement can be a complicated process, but business owners must be able to continue to obtain high-quality products and services at sustainable costs. BI is an effective way to do this as it provides essential data to businesses who may not have the information they need to make the correct business decisions.
In general, BI is the use of analytics, technologies, and software to retrieve and extract data from enterprise resource planning (ERP) systems. That data is then converted into readable, valuable information.
BI allows businesses to summarize lots of data into meaningful, fact-based information. This information helps business owners and stakeholders make decisions and solve information-related problems.
Purchase order software provides its own business intelligence. Because business intelligence is all about data, effective purchasing software can quickly interpret data and turn it into readable information for business decision-makers. It can also automate processes, such as approvals, to make the entire procurement process go faster. At the very basic level, the data provided by procurement software can help businesses determine where in their procurement process, there is a breakdown, causing the entire process to delay and negatively impacting business relationships.
Business intelligence and the software that comes with it can help with strategically sourcing goods and services to provide procurement analytics. E procurement software can easily provide your business with the business intelligence it needs to make important decisions.
Procurement and supply management can keep costs down. The management of these aspects of a business should include real-time collection, tracking, and analysis of every part of the procurement process. The most effective procurement software collects and analyzes data at each stage to ensure optimum cost and maximum profit. Each activity, transition, and event generates data that should be analyzed.
Let’s take a look at how business intelligence involved in the procurement process can improve its function.
Real-Time Data to Identify Cost Savings
Organizations should integrate spending and transaction data across departments into a single system. Blending these sources allows the procurement team to gain timely insight into spending patterns and take measures to correct any issues. In other words, BI allows the team to be proactive instead of reactive.
Procurement data used to focus on the past, but this approach is now evolving. Intelligent data will help procurement teams work with data that looks forward and proactively develop strategies.
Data-Driven Decision Making
You may have experienced aspects of ineffective processes, but were unable to prove them, making it difficult to enact change in the procurement process. With interactive dashboards, the procurement staff now has the data to back up their decisions. By collecting this data over time, it can positively influence procurement strategies across departments. The data can then be used to set key performance indicators (KPIs) so that teams can evaluate factors that are crucial to success.
BI dashboards help to ensure proper data integration so that changes can be made in real-time.
Analyzing Supplier Relationships
The difficult and complex process for maintaining supplier relationships can create strained partnerships. Without the proper data and insights, there is a lack of trust and transparency between partners.
Your business requires quality goods and services by a certain date at the best possible price. On the other side of this, the suppliers need more business, and they want to receive advance notice of purchases and demand patterns. There is a new procurement trend dealing with supplier relationships that involve optimizing value over just price. This will determine the total cost of acquisition and operating costs. Procurement analytics provide insights that will further develop beneficial symbiosis between businesses and suppliers.
Enabling Automatic Purchases
Using BI solutions within the procurement process can provide benefits to both the supplier and business. These applications can lift the workload burden off of the busy shoulders of many procurement teams.
Procurement professionals often have to spend much of their time with transactions, distracting them from the more complex responsibilities involved in strategic sourcing. BI dashboards make automated purchasing possible, reducing the buyers’ workload and allowing them to focus on more difficult tasks.
With this, the buyer doesn’t need to be involved because the information is sent directly to strategic suppliers so that the business receives the best value for the items they need within the established time frame. Automated purchasing allows buyers to provide concrete feedback to their suppliers.
BI lets you monitor supplier performance in real-time. With easy access and data-based decision making, you can choose the suppliers that benefit your business. With BI tools like dashboards and reports, the procurement team can easily analyze cost, quality, and delivery performance by the supplier.
These analyses allow for quick identification of the most efficient and reliable business partners to provide data and support communication with them. If a supplier has breached the contract, you will then have data to back up your claims. Also, by utilizing data visualization practices, you can view and compare supplier performance quickly and easily.
Data allows for transparent and business-beneficial negotiations between businesses and their suppliers. BI tools can organize data and tell a story to show how suppliers are performing compared to other suppliers. BI purchasing software dashboards can show this information:
An effective procurement process should always utilize procurement software to get the best, real-time business intelligence. This data will provide individuals across departments with the analytics they need to make data-driven decisions. This information will help increase efficiency and keep costs down, helping businesses achieve success and growth.
The procurement process can be complicated, which is why many businesses are still using spreadsheets and manual processes to control and manage their purchasing. Strategic procurement spans across all different departments of an organization. A successful procurement process is crucial for keeping costs down and making businesses more efficient. An effective procurement strategy includes a financial plan which helps manage budgets, workflows, and production timelines to keep everything aligned with the business objectives.
Without a defined process, it will be challenging to keep the daily functions of a business efficient and productive. It will also be near impossible to stay on budget. While every strategy should be tailored to the individual business, it should consider the company’s current status, stakeholders, market conditions, and company goals.
These are the goals of a procurement strategy:
Here are the steps you can take for a successful procurement process:
By not integrating procurement software, you could be losing money from errors, delays, and even overpayments. Procurement software increases productivity while minimizing errors and reducing the need for data entry and redundancy. You can also track purchases from purchase order to payment, eliminate the need for waiting on approvals, create invoices from PO’s, and use the data for all parts of business operation.
Know how the company is doing at this very moment before moving forward. If you have a strategy in place or are currently using spreadsheets or inexpensive accounting software, determine if this software is meeting your needs. If your business is growing, assess whether these purchase order software systems will be able to meet your future needs when it comes to inventory, invoicing, and accounting. Identify any weak areas of the procurement process that need improvement and look for areas where the money is being wasted.
It may also be beneficial to talk to all of your employees involved in the purchasing process so that they can give you an idea of their day-to-day and what maybe disrupting the process.
The stakeholders will need to be involved when you are refining, or even defining, your procurement process. Make them understand the goals and sell them on the idea of a speedy turnaround and better production time, with more efficient workflows, reduced errors, and significant cost savings.
While the goal of your business may always be to make money, your strategic goals should be detailed. How will you make more money? A well-defined goal includes a target and a plan. A goal could be, for example, increasing sales by x percent. You should always make sure your goals are measurable and realistic. The best way to measure your results is by using that procurement software we discussed that will provide you with analytics to let you know how your business is doing.
It’s time to determine how to prioritize purchases. This process will vary from business to business. If you’re a retailer, for example, you’ll need to work with the marketing department to determine which goods should be pushed and when. Lucky for you, purchase order software allows you to more effectively communicate across departments with data that can affect your priority decision making.
You should make a list of authorized purchasers and a budget for each department so that it’s clear who is allowed to spend and how much. Expected purchases can be approved automatically using purchase order software, eliminating any wasted time that could be detrimental to a business relationship.
Define specific guidelines for each department when it does to procurement. This should include which suppliers are preferred, what would need approval, and who would provide approval.
If you’re in search of new suppliers, you should typically take bids from three or more suppliers. In order to take on new companies, you will need to refine your sourcing strategy. The policy should specify the criteria used to determine which suppliers are chosen. This criterion should include, supply quality, price, delivery times, service, compliance with regulations or company objectives, or anything else you value in a supplier.
You should already have a preferred vendor list that you crafted by evaluating suppliers based on specific criteria. If you think your list could be negatively impacting your business, it may be time to take another look and revise the requirements so that the purchasing decisions don’t lead to lost sales.
When it comes to negotiations with vendors, it’s essential to select the right bid. The lowest bid may not always be the cheapest option in the long run. If you go with the lowest bid and don’t have a strategy in place, you may end up with cheap products and your customers may lose faith in your business. Make sure your criteria cover all potential issues that can arise from a poor vendor relationship.
Once you have executed your plan, your new procurement process should be evaluated so that you can determine its success. Common metrics include:
Once you’re able to take a look at the metrics, you can continue to fine-tune your strategy as necessary to enhance the process as your business grows.
You can also use purchasing software to determine even more analytics that can help you measure success. You’ll be able to see where any breakdowns within the company occur and come up with a data-based solution to fix the issues.
Your procurement strategy should be a roadmap for business spend and used to maximize the budget and minimize errors, late payments, maverick spend, and anything else that may negatively impact the procurement process, and in turn, business relationships.
An example of economies of scale is when you buy an item in bulk because buying more ultimately means that you’re getting each unit at a lower price. For businesses, cost savings occur as a result of making more products. What this means for companies is that a business can increase its profits by making their production processes more efficient, rather than increasing the price of a product.
Economies of scale can be achieved in various parts of the business:
An efficient procurement process is just one way in which businesses can achieve economies of scale. An efficient procurement function can provide many financial benefits to an organization, helping them further achieve economies of scale.
Shared Business Functions: A purchasing system can help businesses share information and duties across all departments. If a business has an accounting department in another location, they can easily collaborate with other departments using one platform.
Staff Efficiencies: The automation that can be achieved with a procurement process will require fewer employees, or can make employee’s tasks simpler so that they can get more done.
Purchasing: When it comes to purchasing, buying in bulk can cut costs. Larger spend and greater purchasing leverage can result in reduced prices and costs.
Data: Procurement software offers greater and more efficient data for financial and inventory records, making it easier for business owners to make decisions and save on costs.
Further Cost Savings: With lower supply and service costs, there is potential for higher bottom-line profitability. Cost reductions can be quantified, projected, reported, and audited.
Economies of scale are all about the cost-savings that allow businesses to make more of a product for less. Centralization of the purchasing process can offer real-time analytics about the financial benefits that come from this type of scale and growth. An effective procurement function allows for:
Organized Planning: With an effective procurement process, your department will be able to develop a plan to address expense categories over a certain period of time.
Specialization: Your purchase department will be able to organize staff around products, supplies, and services to improve results and boost sales.
Supplier Relationships: Purchasing teams will be able to more easily determine the interest, capabilities, competitiveness, and financial strength of suppliers. This process will eliminate suppliers that may not be ideal to work with.
By vetting suppliers, you will have a list of fewer supplies which helps keep costs to a minimum as only this small amount of “verified” suppliers is paid regularly.
Profitability and Growth: Cost reductions from an efficient purchasing department will reduce overall costs and increase profits.
Businesses are finding out that a simple, manual spreadsheet is not enough to create an efficient purchasing team. Instead, robust purchase order software can help keep costs down and improve profitability, helping businesses achieve economies of scale. Effective procurement software should feature:
Whether you’re an e-commerce business or a brick and mortar store, odds are most of your products are featured on a website where customers can make buying decisions from the comfort of their own home. What you may not know is that selling products online can dramatically improve your PO process.
By synchronizing actions from different platforms, such as your website, you can put your data in one spot. Instead of using dashboards from the various marketplaces in which you sell your products, you can integrate your software to show all business information in one platform.
The best procurement software will also be able to integrate with programs you are already using, like QuickBooks. While these business accounting programs are great, they don’t provide the best data when it comes to purchasing. By integrating your new PO software with QuickBooks, you can more easily make business decisions based on real data.
To keep costs down, it’s important to automate any functions within your business that you can. Automation can streamline the procurement process while reducing errors and the cost of the process, making your employees more efficient. With procurement software, you should be able to approve requisitions quickly and easily, instead of waiting for another person to sign off on any sales related inquisitions. Automation can also allow you to quickly turn a purchase order into an invoice, documents crucial for business management and budgeting.
Purchasing is all about effective communication. The entire process relies on communication, and without it, you may face delays and disruptions that can damage your existing customer/supplier relationships and cost you money in the long run. Purchase orders need to be transferred to departments in order to improve workflows. You’ll also need to be able to easily pass along PO’s and create invoices for the accounting department.
Internal communication is also essential to the efficiency of your entire business. Information on customers and suppliers needs to be accessible across departments. Purchase order software allows for seamlessly transferable information. Databases can often be difficult to use across departments and may require additional training that will take time. This can cause a breakdown in the procurement process, ultimately negatively impacting the customer experience. Purchase order software allows data and information to be shared across departments for a quick and thorough sales process.
Product Inventory Control
Your business relies on your inventory. If a customer purchases something from your business, they’ll want to know that they can rely on you to deliver. If you are out of stock and didn’t know until you received that order, your customer probably won’t be coming back.
As your business grows, it can be difficult to keep track of all of your inventory. You should always know how many of each product you have in stock so that you can avoid problems with customers in the future. An effective procurement process will be able to keep track of all incoming and outgoing orders and track your inventory to make sure you have enough when you need it.
Small-to-mid sized businesses are always finding ways to improve workflows and create efficiency to save money. While there are many different ways to execute the purchase order process, there are a few trends that are becoming increasingly popular for SMBs.
Automation promotes efficiency and productivity, helping businesses control costs and improve workflows that benefit their customers and the business itself. Believe it or not, there are still many small businesses using spreadsheets from Excel to manage fheir purchasing process.
A simple spreadsheet is unable to keep up with purchasing demands and is prone to human error that can devastate the procurement process. E-procurement software is becoming more popular as businesses see the benefits of automation and how it makes their business run more smoothly and with less errors. Automation can take place at any part of the procurement process that doesn’t require much human intervention. Instead of taking a purchase order and manually inserting the correct information into a new invoice, procurement software is able to automatically produce an invoice based on the precise information on the purchase order, making it less prone to human error and efficient to transform the day-to-day operation of a business.
With technology becoming increasingly popular for businesses to handle their procurement process, business owners are able to make data-driven decisions. With procurement management software, analytics and data are easy-to-read in one simple space and can be used to create better processes, make important business decisions, and control spending. While a manual procurement process may be too complicated to effectively make important business decisions, owners and operators will be able to make more well-informed decisions much easier. In the future, we will only see data-based decision making grow among SMBs as technologies will deliver better insights into the procurement process.
Using cloud-based procure-to-pay software has also made business owners think about their current digital strategy to adapt to AI and automation. While this type of procurement software may not directly affect all strategic business decisions, it has been increasingly proving the worth of digital solutions to make businesses consider the current landscape of their entire business and motivate them to implement digital strategies in all aspects of their business inside and outside the procurement process that help grow their organization.
While many companies still use a more manual procurement process utilizing spreadsheets and the like to execute their current purchase order processes, they’ll soon find a shift in their talent pools as procurement software changes the way procurement is done. Many businesses are finding that their employees are not qualified to implement technologies like AI into their existing procurement process, leading to an increase of hiring more technology-driven employees to streamline workflows and improve business functions. While business functions and operations shift to more automated procurement processes, they’ll find a need for more tech-savvy employees that are able to complete tasks quickly and effectively using the new software.
Customers are important to any business and procurement software has shown to improve the relationship between vendors and buyers. Because synergy between these two parties is important for the survival and success of business-to-business operations, customers need to have visibility in every step of the procurement process to get the best price possible. Transparency not only improves trust among businesses, it will also promote competition to drive profits. Thinking beyond the price and focusing on beneficial relationships, businesses will need to analyze their performance to reduce costs and increase efficiency to make their customers happy and coming back, business strategies that procurement software can help execute quickly and easily. Purchase order software will also help customer service agents answer inquiries and questions from customers regarding their orders or issues, enhancing the customer experience.
There are some uncertainties in running a successful business, but an effective procurement process can minimize risk and prevent legal issues in the future. Being compliant with the legal standards is a great start, but it’s not everything. Because word-of-mouth is the biggest influencer of customer purchase decisions, your procurement process needs absolute transparency to reduce possible risks that can result in a bad reputation.
One of the biggest advantages of effective purchase order software is that it helps control costs. Indirect spending needs to follow a refined process to avoid leakages, contract terms, paperwork, and dealing with lots of complicated customer information. This process can be difficult and businesses can easily miss out on discounting, budget accuracy, and supply chain visibility. To prevent missed opportunities, more businesses are looking for automated financial P2P solutions that can be integrated into their current accounting system. This will minimize unnecessary spending by streamlining the entire contracting process.
As procurement shifts to a more technologically advanced process, artificial intelligence will play a crucial role in how businesses perform their purchase order process in the future.Repetitive tasks that your employees perform daily will be done using artificial intelligence to free up team members to focus on more important business-affecting tasks. Mundane tasks will soon be put on auto-pilot to also allow businesses and their employees to focus on building beneficial relationships with their customers.
With the implementation of AI, more SMBs will focus on chatbots. In order to retain customers and gain new ones, a company needs to be able to respond quickly to requests for information and be able to answer any questions in a timely manner so that the customer doesn’t go elsewhere. While staffing an employee who can complete these tasks may be your first choice, it’s expensive to have an employee available 24/7 to handle inquiries as they come in. Instead, chatbots use advanced technologies to simulate human conversation in an automated way. They can also help automate routine tasks and collect data. Chatbots are becoming the less expensive option than hiring a human to perform simple customer service tasks, making them a practical solution for all SMBs who want to be able to respond to customer inquiries quickly and accurately.
There are a variety of reasons why a company may make an acquisition. If a company is growing quickly, one of the most compelling reasons to make an acquisition is it can accelerate growth. Whether it’s talent or innovations, an acquisition in this type of scenario can shorten the amount of time it takes to hit the next milestone.
Although that scenario makes acquisitions sound very appealing, it’s important to understand that they’re by no means a guarantee of success. In fact, the majority of acquisitions fail. That truth spans from the smallest of businesses to huge corporations. So even though acquisitions offer so much potential, why is it rare for them to be truly successful?
The issue of acquisition failures comes down to a few issues. Those issues include incorrectly identifying targets, taking the wrong approach to financing and not properly integrating an acquisition. Since there are some very real challenges that stand in the way of making an acquisition successful, we want to cover the four most important elements entrepreneurs need to evaluate to get the results they actually desire from an acquisition:
The Right Timing
Many people underestimate just how big of a role timing plays in whether or not a startup is successful. Timing is just as important for acquisitions. A business needs to be at the right stage for an acquisition to work. One of the biggest mistakes a company can make is doing an acquisition because they think it will fix their weaknesses. If a business isn’t currently in a position of stability, they shouldn’t be thinking about an acquisition.
One of the reasons entrepreneurs should always think big is there’s a lot of risk involved in bringing a vision to life. As a result, there needs to be a very big upside. This same principle applies directly to acquisitions. Bringing two businesses together will need to create significantly more value (and definitely not less).
Opportunity to Negotiate
It’s important for an acquisition to be a good deal. That’s why there needs to be room for negotiation. Not only is negotiation important on the financial side of things, but if a company that’s being looked at for an acquisition isn’t willing to do any negotiating, chances are they’re going to drag down the entire acquisition process.
A Clear Way to Integrate
Even if the first three elements are in place, it’s still vital to have a clear way to integrate the acquisition. Without a clear vision for integration, an acquisition is almost guaranteed to fall short of expectations.
While there’s still no way to guarantee that an acquisition will be successful, focusing on these four elements is the best way for an entrepreneur to make an acquisition work as expected.
As the role of procurement continues to increase in scope and importance across organizations, more people are looking at exactly what makes great procurement professionals. While there was a time when procurement was an afterthought for many organizations, its increased role means organizations are looking for talented individuals who can deliver the results needed to thrive. Because countless organizations simply don’t know what they should look for in a procurement professional, we want to provide some clarity by highlighting the five traits that matter most:
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