The Complete Guide to Procurement Automation

There’s no denying that automation is one of the biggest business trends of this decade. By turning to automated procurement systems, companies are finding new ways to optimize spending and streamline processes without making excessively large investments.

What is procurement automation exactly? How can it help your business? And what processes can you start automating today to get the most out of your investment? Let’s talk about automation for procurement professionals.

What is Procurement?

Specifically, procurement in business is getting the right supplies from the right vendors. Procurement teams choose from a variety of providers when sourcing to find the right price and get the exact products or services they need. They also handle the finalization of purchase requests, purchase orders, and approvals.

What is Procurement Automation?

Procurement automation software digitizes the procurement process, freeing employees from having to do the repetitive tasks that make operations messy. The result is an accurate, streamlined process with more time for important tasks like decision-making and business strategy development.

Today’s methods of procurement tend to be disorganized and rely on manual work. Having to track orders from an Excel spreadsheet or through paperwork can result in inefficiencies. With procurement being as important to a company as it is, it’s no wonder why procurement automation is on its way for so many businesses.

Top Procurement Processes to Automate

Procurement teams aim to automate several functions:

• Choosing suppliers
• Communication among stakeholders and status notifications
• Ordering and receiving products/services
• Documenting the process
• Making future business decisions based on past activity and up-to-date data

There are multiple services and platforms out there to automate procurement processes for your team. Each one has its own benefits, features, and selling points. You can choose the one that fits your use case the most. Understand the difference in procurement vs. purchasing when automating processes. Some common processes and procurement automation features follow.

Purchase requisition

Teams with automation software can create, approve, and track purchasing requests in the intake process with only a few clicks. They can route information across multiple decision-makers and coordinate discussions to streamline the purchase requisition and approval process.

Purchase orders

Not to be confused with requisitions, purchase orders are one of the tasks that many businesses struggle with. Process fragmentation is the primary issue here since there are usually multiple stakeholders and suppliers to deal with. By adopting an automated process, finance teams improve productivity and save on costs. 

Procurement software includes automated workflows for PO routing to approvers, preventing bottlenecks, and making approvals quicker in that entire process. These purchase orders are important for later matching POs with invoices in accounts payable (with end-to-end AP automation software) to verify that your company’s only paying for items received. 

Financial visibility

Part of procurement is generating data regarding order history, past purchases, and previous contracts. This real-time information gives you an overview of the financial activity of the company for spend management and can help you make more informed business decisions later. 

Procurement automation collects and displays this data so it’s easily digested and not overlooked. You’ll be able to access real-time dashboards and analytics metrics.

Invoice management

Invoices typically go through several steps: verification by the financial department, approval, payment, and order fulfillment. Badly managed invoices and invoice processing can result in delays and unexpected spending. Many platforms integrate well with your current financial tools, like ERPs, so you can keep using what you already know best.

Vendor management

You’ll have better vendor relationships in your company’s supply chain when you have a fast and organized procurement process, leading to better supplier performance. This way, you can find and continue to use the best suppliers, and avoid onboarding new vendors unnecessarily, all working to make vendor management a lot easier and more efficient.  

General organization

Don’t dump all your invoices, approvals, and documentation into a filing cabinet. Don’t rely on keeping track of email chains as a manual task. Use a digital platform to keep tabs on procurement tasks, including electronic documents, with a few clicks. Having a central repository location to manage contracts and other documents, plus procurement management processes, ensures data consistency and reliability as your business continues to grow.

Software specialized in procurement automation for businesses is incredibly versatile. Find the options that give you the results you need. Let’s start by exploring how automated procurement can transform your internal finance and procurement process.

How Can Automated Procurement Help Your Business?

A major area in line for automation is procurement and the procure-to-pay process. 

In procurement automation your business is cutting down processing times by eliminating time-consuming manual business processes and removing the possibility of human error, such as manual data entry errors. An automated system replaces these manual processes with digitized, artificial intelligence/machine learning-driven processes and uses RPA (robotic process automation) for performing repetitive tasks. 

Automation makes the job of the procurement team much easier and far less risky to the company’s bottom line. Some procurement automation results include experiencing large cost savings and doing less hiring.

While the transition to automated procurement has its own set of complications (such as adding new training programs to allow employees to work efficiently with the new process), businesses are continuing to automate procurement and see the benefits of procurement automation. It’s one of the most significant steps to take to avoid getting left in the dust by the competition.

Making the choice to adopt a cloud-based procurement and purchasing software has been shown to greatly empower teams and companies as a whole. After all, procurement process automation makes the work of individual employees more manageable and facilitates communication between teams and departments. 

Move from Manual to Digital Procurement Processes

If we understand how important the procurement function is, it should be pretty obvious why moving away from manual processes to a modern purchasing process with digitization and automation is a must in today’s workforce.

Submitting and completing procurement cycle tasks digitally has many benefits when compared to manual methods. Some of the biggest advantages of digitization and automation follow.

Speed

Automation accelerates the approval process for a procurement department. If purchase requests ever get stuck or lost, or you’re having trouble keeping up with messy paperwork, you’re wasting time and could potentially introduce delays for your customers and suppliers. Automation helps to cut down and prevent this wasted time.

Efficiency

Anyone working in an office can tell you how cumbersome file cabinets can be. It’s too easy to lose purchase orders or requests, especially when your company deals with multiple suppliers. Keeping things structured and efficient helps maintain healthy supplier relationships. Organizing and securing your data can be a challenge as well. How can you analyze data efficiently in the future when it’s time to plan a budget? An automation platform is the answer.

Fidelity

Automation reduces the chance of making manual errors, making it less prone to mistakes than manual procurement. Errors in procurement processes can have dire consequences for many businesses. Miswritten orders, for instance, can result in dreaded maverick spend.

Security

Because your data is stored digitally, only those given permission can have access to sensitive information. Everyday tasks in procurement can be documented accurately and securely through automation platforms.

Organization

Procurement workflows include a lot of moving parts, and departments have a lot to track from purchase orders to agreements to receipts to communication with stakeholders. Organizing all the information through a procurement automation solution reduces delays and makes everything easily trackable. 

Transitioning to Procurement Automation

You might be asking how you can start the transition to automated procurement, using advanced procurement technologies. One major step is deciding what exactly you want to automate. 

Remember, automation isn’t a magic bullet. You can’t just flip a switch and automate your entire financial and procurement process. Many solutions can make onboarding and, therefore, automation happen a lot faster. But automation is a step-by-step process that can also evolve over time. It’s best to start with an idea of what you want to achieve, like a team goal, and build out or customize your process from there. 

So where should you start? And which processes are the easiest to automate?

How Do I Choose My Automation Service?

Are you having issues going through all the software options? As we’ve mentioned before, every procurement automation service or automation software has its own set of features and benefits, and it’s up to you to find the most suitable one. Some questions to ask are:

• Can I demo the platform first? Many automation software suites allow your company to try out the product to see if it fits in with your workflow.
• How complex should the platform be? Your choice must have enough features to cover your needs without being too complex that your staff might avoid using it. Think about the specific workflows you need to automate.
• Is the service proven? Look for automation from companies with proven track records. See what other businesses use the software service (SaaS) and find out what the reception is.
• Does the platform support integrations? Your core finance tasks may not operate in the same environment. You may require a solution that connects with other recognized platforms to ensure the proper flow of data.

Keep in mind that the procurement team and internal stakeholders will need to familiarize themselves with the platform before using it to its fullest potential. While it may take some time to integrate the new software into your workflow, the results will be worth the effort.

Procurement Automation is a Long-Term Strategy

Companies procure the supplies they need from vendors in order to operate. Choosing the right suppliers and completing complicated business transactions is inefficient at best when done by hand. To achieve and maintain optimal results, growing businesses should start automating their procurement processes with the best automation tools.

Automation that’s driven by AI/MLnot only speeds up the processes but also assists in making teams more organized and secure. Procurement automation software provides centralized contract management. It’s becoming an industry trend to automate tasks like procurement. Making the transition will be an essential step in staying competitive and improving supplier relationship management.

Whether your business needs cost savings, better controls, help with supplier management, a smoother purchase order process, or spend management, Tipalti Procurement has the tools you need to enhance your team’s procure-to-pay cycle and boost efficiency. Explore more.