Digital Procurement: Six Key Areas of Transformation
Organizations are adopting the latest and innovative ways to digitize their procurement processes and unlock new development opportunities. As purchasing transitions to digital, the main focus of organizations shifts to make the transactional aspect of business procurement seamless. Ultimately strengthening the strategic procurement workflow and allowing procurement professionals to focus on higher value-added activities.
Here we present a few areas where you must focus in order to optimize your procurement process:
In the current market, where business supply chains are large and global, supplier relationship management is crucial – especially when an issue with small suppliers has such a significant impact on the bottom line. Adopting advanced tools that enable easy, two-way communication between your procurement team and your vendors is the best way to ensure quick and speedy communication if any problem arises.
For small and medium businesses with a smaller supply chain base, digitization enhances the day-to-day performance, efficiency, and collaboration of the entire company. When purchasing and finance teams can quickly collaborate digitally with suppliers spend visibility enhances, productivity increases, and errors decrease. This joint efficiency improves key supplier relationships and can often lead to additional savings on goods and services.
Product Catalogs and Requisitions
The way we shop and buy today has been entirely digitized. Now, it’s time for businesses to adapt to this change. Procurement teams require an easy and innovative way to search for and purchase the goods and services they need in order to maintain the business running effectively – especially as many businesses continue to operate remotely. With an online catalog providing only pre-approved suppliers to purchasing team can quickly find the goods they need at pre-negotiated rates.
Using a modern marketplace and taking advantage of negotiated supplier discounts increase employee adoption rates while also reducing costs and any maverick spending. Automating the requisition process provides finance and purchasing teams with more control over what the company is spending its money on, with which vendors, and allocates it’s costs and budgets efficiently.
Paper invoices can cause unnecessary issues like overpayments, duplicates, and possible errors. Digital invoices processing offers procurement professionals with more control over who is paying, how much, and when. All leading to improved cash flow and working capital, decreased invoice cycle times, and enhanced spend visibility.
The core aspects of digital invoice management are – digital invoice capturing, which enables companies to automatically capture and process incoming invoices electronically, invoice matching, which ensures you only pay for what you ordered and actually received, plus AP integration, which automatically alerts the AP team the moment invoices are approved. All these capabilities will significantly enhance productivity, efficiency, and financial control.
Manual payment methods are outdated, inefficient, and costly. With digital payments, procurement teams can instantly obtain the benefits of an improved workflow and are about to capitalize on payment discounts. In addition to that, digital payment processing reduces supplier lead times, fraud, and costs, plus vendors will appreciate when they see a payment immediately hit their account.
Reducing Unnecessary Costs
With the latest technologies improving day-by-day, businesses should take a different approach to reduce unnecessary costs in the procurement process.
A group of employees involved in the buying process, and decision-makers need to know the labor cost can be reduced by investing in this type of latest technology. Purchasing can become a centralized and more virtual function within an organization, the more it uses these technologies, and the reduction in operating costs; as a result, it increases the savings on your bottom line.
To develop a holistic procurement process and drive business-wide cost reductions, companies must capitalize on the maximum value of digital technologies. Procurement teams would need to acquire the key skills to succeed in a digital world and remain relevant in the market at the same time.
With the rise of data accessibility and utilization, a major concern over data security also increases. To ensure business continuity, the procurement department needs an effective data security strategy to protect the sensitive personal and financial information.
Violation of this data can affect the entire buying process; put the entire organization at risk of compliance issues and even business continuity. It’s more crucial than ever for business owners to work closely with the IT teams and utilize the latest technologies for increased data theft prevention.
As procurement’s priorities continue to evolve, digitization becomes more crucial. Digital transformations in procurement often require an organization to use tools which are available to accelerate its digital transformation. Procurement software with advanced features like RPA, big data, and more can be used to make business more efficient and profitable.