Online Procurement Software and Lean Procurement

The ‘lean’ approach, through which organizations identify and eliminate those activities that do not add value to the process from their customers’ perspective and hence dubbed ‘waste,’ is getting more and more takers as organizations have realized the benefits it has and the improvement in productivity it can bring.

Lean does not just apply to one activity or one function nor does it end with one or two iterations. It is a process of continuous improvement that can be applied to any activity or function within an organization from procurement to transportation to manufacturing. One of the functions in an organization that sees the most amount of waste, and hence the function that has a lot of scope for improvement is the Procurement function.

The first step in the supply chain, procurement is the umbrella term for activities like supplier selection, requisition, payment, and contact administration that make up the entire procure-to-pay cycle. As organizations grow in size and consume more resources, their procurement behavior becomes complex and a lot of ‘waste’ creeps in. Some types of waste typically seen in procurement are long lead times, miscommunication/lack of real-time data, unnecessary inventory, excessive paperwork, and disparate procurement systems, sometimes arising due to the lack of a comprehensive and streamlined procurement process.

These issues are not the easiest to fix. As mentioned earlier, the procurement process has to go through several iterations before it can be called lean. A good first step towards this goal is the creation of a centralized system which helps define and implement the procurement plan, and this is where online procurement software comes in. These comprehensive centralized solutions streamline the activities of supplier selection, requisitions, approvals, sourcing, invoices, payment, and inventory management.

This in turn leads to the  creation of a flexible sourcing system, reduction in lead times, increase in transparency, and elimination of paperwork. Users can also generate extensive reports on lead times, transportation times, requisition-to-approval times, quantity of goods purchased, payments made and payments outstanding, etc… which will then help them identify process gaps (waste) and take measures to eliminate them, thereby making their procurement process, lean.

Click on the link to know more about online procurement software, its features, and its benefits.

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