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:
Anyone who has come into contact with spend analytics knows they can provide clear information on spending activity. While that can be useful, the reason companies should care about these types of analytics is the information they can offer goes beyond just spending. Specifically, it can help a company increase productivity. It can also boost savings by making it possible to streamline existing purchase-to-pay practices.
How exactly can spend analytics help your business increase savings and streamline its practices? The answer is by identifying some specific areas that can be improved, which are:
Regardless of the size of a company or its specific industry, the activities of procurement and accounts payable impact each other. Because of this link, a company’s goal should be to maximize the efficiency of both departments. Doing so has very clear benefits, especially in regards to the procure-to-pay process.
One of the best ways to reap all of those benefits is to automate procure-to-pay activities. Purchasing automation offers efficiency and speed improvements that simply aren’t possible through any other means.
Automation directly impacts procurement staff. Once automation is introduced into this environment, it provides procurement professionals with what they need to operate at a higher level of both efficiency and productivity. What’s even more appealing about those gains is they can then help to reduce the staffing costs that go along with processing orders. Instead of spending large amounts of time on basic tasks related to the purchasing process, members of this department can focus their attention on activities that create far more value.
Key Benefits of Procure-to-Pay Automation
Once procure-to-pay processes are automated, a business will notice faster cycle times. The second notable benefit of purchasing automation is increased efficiency for purchase order processing. Because an automated system takes care of routing information in the most efficient way possible, previously wasted time caused by communication inefficiencies is eliminated.
The third benefit that’s very meaningful for businesses is that procurement employees are able to process significantly more purchase orders. That benefit stems from purchasing automation directly assisting with common tasks like purchase order generation.
Another benefit that goes along with automating procurement is a reduction in supplier lead times. The clear and consistent data sharing provided by automation ensures that suppliers have everything they need to avoid delays.
Moving Towards Purchasing Automation
Once businesses learn about all of the benefits that procurement automation has to offer, they generally want to learn more about what it takes to make this transition. When this topic comes up, it’s generally a good time to review the current strategy that’s in place for managing procurement. Looking at the current state of areas like receiving and invoicing provides an opportunity to identify key areas for improvement.
The good news about purchasing automation is not only is it very beneficial, but it’s easier to implement than many companies expect. With the right purchase order software, companies can get all the features they need. From customized work flows to purchase order generation, quality purchasing software puts all the power of automation into a straightforward interface.
E-procurement can provide numerous operational benefits to hotels that make the transition to this type of system. To help demonstrate exactly why automating inventory and procurement should be a top priority for hotels as 2015 winds down and 2016 gets nearer, we want to highlight the most significant benefits:
The hotel industry has gone through some major changes in recent years. Not only has it had to adapt to the Internet, but it has also had to find ways to stay competitive in an environment with increasing pressure from sources other than traditional hotels.
Even though the changing landscape has presented very real challenges for hotels across the entire industry, the ones that have continued to thrive share some key characteristics. Specifically, the hotels that keep making progress are those that have embraced what technology can do for them.
Although it would be easy to only view technology in a negative light as a result of the additional competition it has created, savvy hotels have taken a different approach. Instead of trying to resist the major ripples created by technology, they’ve found the best ways to harness the technology that’s available.
Technology Can Play a Key Role in Procurement Growth and Efficiency
Since technology is having a major impact across most industries, those in procurement should take a cue from the hotel industry and take advantage of what’s available. Specifically, purchasing managers can gain a lot from using purchase order software. With help from purchasing software, procurement professionals will no longer need to stress over things like enforcing budget thresholds.
Instead, they’ll have the tools that are needed to make this process a breeze. The reality is that’s just one of numerous examples of the way that the right software can help optimize procurement activities. While this type of software is very powerful, what makes it especially compelling is that it can be used without the need for IT support. And to top things off, the cloud functionality of purchasing software means that data is easy to access, completely secure and backed up at all times.
An Important Takeaway for Salespeople and Customer Service
This isn’t an issue that’s only relevant to procurement. It’s also a topic that salespeople and customer service can learn from. For salespeople, the lesson is to keep an eye out for ways to make the lives of prospects easier. By actively looking for solutions instead of just trying to sell a product, salespeople can frame their offerings in a manner that is much more compelling to purchasing managers and other professionals within an organization.
The lesson for customer service is similar to that of salespeople. When someone calls a customer service representative, it’s generally because they have a problem that needs to be solved. Customer service professionals can get a leg up by always having their eyes open for the most efficient way to tackle problems. By being open to even better ways of doing things, members of the customer service team can make things easier for themselves and others.
Contact us today to learn more about how Bellwether Purchasing Software can assist your company in automating your purchasing processes. We offer a Free Live Demo and Free 30 Day Trial, no credit card needed.
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