11 Core Benefits of Procurement Automation
Surprisingly, many businesses still rely on manual processes. And that’s perhaps most apparent (and painful) in the procurement process.
Paper invoices strung about on desks, waiting to get processed. Contracts, buried, nearly forgetting in filing cabinets. Spreadsheets with purchase data, incorrectly entered, waiting to make an accountant’s life a nightmare.
While a powerful procurement strategy can empower your organization, you won’t get far without automating your procurement process.
Whether you’re on the fence about procurement automation or you need selling points for your c-suite, here are 11 benefits of procurement automation to help drive change in your organization.
1. Improved Organization
As mentioned above, paper documents make everything messy. They can get misfiled, lost, even destroyed. Procurement automation digitizes these assets, keeping them organized and accessible.
That way, you never have to hunt down documents again.
Imagine how much easier future audits will be...
2. Centralized Communication
Deploying a procurement automation system helps streamline communication by centralizing it. Rather making vendors try to find a way to communicate with you, they can use their self-service portal. Employees can request purchases directly on the platform. And management can approve purchase orders instantly or ask for further information.
No more hunting around on email threads, paper communications, and voicemail to find the information you need.
3. Unparalleled Cost Savings
In a recent global survey, CPOs shifted for the first time in 10 years stating that cost reduction wasn't the main focus of their procurement strategy. Still, 76.4% reported it as their second priority. (Driving operational efficiency was their highest priority at 78%.)
While there’s more to a successful procurement strategy than cost reduction techniques, controlling spending is still essential.
Luckily, procurement automation helps reduce expenses drastically.
Automation rapidly reduces the need for employees to work on menial tasks. This cuts labor costs significantly while giving your team more time to focus on high-level tasks.
Without the systems in place to automate these processes, you can’t hope to compete with leaner businesses that leverage the power of automation.
Manually processing invoices, for example, can cost between $12 - $40 per invoice. That cost drops to around $3.50 per invoice with automation. Automating invoice processing can also help you save more by avoiding late fees and even getting early payment discounts.
Incredibly, that’s just the tip of the iceberg for your true cost savings potential with procurement automation.
4. Improved Vendor Relationships
Adversarial vendor relationships are a thing of the past. For any business to be successful, it needs to team up with other businesses to provide the best possible value for the best possible price to its customers.
Vendors want to know you have their best interest at heart. And vice versa.
Procurement automation helps facilitate that. Invoice automation helps ensure you pay your vendors on time. This helps establish trust. You can also compare vendors to ensure your suppliers are the best ones for your business. And with streamlined communication, you can improve operational efficiency, making it easier for your vendors to work with you.
5. Real-Time Reporting
Automation makes real-time reporting possible. Without connected systems, you’re stuck relying on spreadsheets to transmit data between systems manually. Even if you use applications, that can still mean waiting until the end of the day to run a report. As a result, you’re always working off of yesterday’s news.
Procurement automation connects disparate systems, giving you real-time data insights.
Ultimately, you’ll have a clearer understanding of budgeting and spending. Inventory management will be easier. And evaluating vendor performance can happen in minutes, not days.
6. Powerful Data Insights
The only thing worse than no data is dirty data. And if you rely on manual data entry in your procurement process, it’s likely that a lot of that data is dirty. When employees have to copy and paste data from system to system, duplication, and mistakes happen. Additionally, you could be collecting a lot of data that never gets used.
Either way, you end up with an inaccurate or incomplete picture of your customers and their needs. That can lead you down the wrong path.
Procurement automation ensures that the data you collect is accurate so you can build a business to meet the growing, real needs of your customers.
7. Clear Data Dashboarding
Multiple systems mean multiple dashboards. And that usually means a headache-inducing collection of different data points. Even the terminology (used to describe the same variables) can be different enough on various platforms to be confusing. Consolidating this data means paying an employee to sort through reports and put them together in a report that’s understandable.
All that takes time.
Unfortunately, that means that by the time the report is ready, the data may not be accurate anymore.
Procurement automation streamlines reporting. With integrated systems, your purchasing data will flow into a single portal that’s easily accessible. No more waiting days or weeks for reports. No more trying to piece multiple reports together. Instead, you get clear, actionable insights at a glance.
8. Make Smarter Purchases
When your purchases are scattered across your organization, it’s impossible to make informed decisions. You'll miss bulk order discounts, overpay on deliveries, and miss opportunities to save at every turn. Plus, your tail spend will be out of control with an endless stream of unapproved purchases.
Procurement automation gives you deeper insights into your purchases. You can combine and approve purchases, eliminate overspending, and leverage supplier performance data for better prices.
9. Supply Chain Transparency
Most businesses struggle to get a clear picture of their supply chain. This exposes them to unnecessary risks and complications. Whether they’re overspending on one vendor or working with another supplier who’s engaged in unethical sourcing practices, their customers will hold them accountable.
Automating your procurement process drastically increases transparency in your supply chain. This helps you build long-term, mutually beneficial relationships. It also helps you find new market opportunities that can lead to business growth. Best of all, you can ensure sourcing is both ethical and sustainable across your supply chain.
10. Drastically Reduce Risks
Most people don’t enjoy menial, manual tasks like data entry. Monotonous tasks are soul-draining, time-intensive, and don’t provide much in terms of fulfillment. As a result, it’s hard for people to focus while working on them. In the end, employees tend to make a lot of costly mistakes when carrying out these tasks.
Incorrect data can cause all kinds of problems. Employees can mismanage budgets, overorder goods, and even derail entire projects. However, procurement automation removes the human component and eliminates the risk of manual data entry errors.
11. Adapt to Unpredictable Market Conditions
Uncertainty is the new norm. The pandemic exposed the fragility of our supply chains. And it will be a while before everything catches up.
Still, the truth is that the market will always have unpredictable elements. There are simply too many factors for a person to analyze. And a globalized marketplace increases those factors exponentially.
Procurement automation gives you the time, data, and resources you need to keep your business agile. It also expands your insights into your supply chain, so you can better understand the potential risks.
And that gives you the advantage.
Rather than reacting to change, you’ll have the power to proactively adapt your supply chain to changing market conditions and customer demands. Instead of playing catch-up, you’ll be ahead of the game.