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5 Reasons for Automating the Procurement Process

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What is procurement automation?

The procurement process can be made more efficient by automating manual, repetitive, and time-intensive tasks within the process. This frees up employees’ time and allows them to focus on strategic decisions and building relationships with suppliers, rather than completing administrative tasks. 

 

Why should I automate my procurement process?

Transforming procurement management with automation can streamline the purchasing process and improve budget visibility. This aids decision-making to deliver increased savings rates and reduces high-impact risk. 

This is particularly in the current economic climate as sourcing products and services becomes critical to success. Procurement teams are routinely dependent on paper-based processes or outdated systems that aren’t open to change. With those systems, it’s impossible to gain insight into the thousands of suppliers they work with and assess business continuity.​

An automation platform can help procurement to increase collaboration and engagement along the entire procurement value chain, including planning, sourcing, contract management, order delivery, payment control, and supplier management.

Automating the procurement process is an effective way to help a critical business function to operate more effectively. This is more relevant now than ever due to the unprecedented supply chain disruption caused by COVID-19.

 

 

Read on for five key benefits you can reap from automating the procurement process:

 

Benefits of procurement automation

1. Maximize cost-saving

According to Chief Procurement Officers (CPOs) in a Deloitte study, 74% of CPOs cite cost savings as the primary driver for performance measurement. Automation can help significantly when it comes to the procurement process, which historically is very paper-heavy, manual, and arduous. This could cost companies money in two ways. Firstly, the long procurement cycle meant that money got caught up in lengthy reviews and evaluations. Additionally, the daunting tasks of filling out procurement forms meant that employees would avoid engaging with procurement, so discount opportunities from bulk buying or using preferred suppliers for cost savings were often overlooked.

This was the case for pharmaceutical company Takeda, who found it difficult to get business users to engage with their three-page form when they needed to source a supplier or execute a transaction. Avoidance of the procurement process meant that they were unable to deliver the full potential of cost savings and couldn’t uncover the biggest value opportunities for the organization.

In just 10 weeks, they used Bizagi's low-code automation platform to transform the paper form into a web-based questionnaire, supported by workflows and business rules. They also automated procurement’s supplier request processes and their operational support process. This made it faster and easier for employees to engage with procurement, which increased the potential for cost-saving across the business and ultimately improved the perception of procurement to the 30,000 employees at Takeda.

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2. Optimize user experience

As demonstrated by Takeda, an overly complex procurement process can put employees off using the procurement center for purchases. Organizations should aim to make the process as user-friendly as possible to maximize employee engagement and help the organization make more efficient purchase decisions.

Deutsche Post DHL built a custom, fully integrated automated Vendor Master Data Management portal using Bizagi to support the procurement process. The portal has over 320,000 global users, helping vendors to self-serve, improving both employee and end-user experience. Bizagi has automated tasks in the process such as initiating cases, submitting forms, requesting approvals, and duplicating data in the ePurchasing solution.

The standardized process created in Bizagi helps to ensure compliant vendor selection, and automatically generates the information needed for audits, which was previously buried in emails or even deleted in error. The ease of use of the new platform provides a quality of process and improved user experience to the extent that users do not require training on the intuitive platform, saving further costs.

The easier it is for employees to interact with the procurement department, the more likely they are to use it, which means all purchases can be tracked and the organization can take advantage of discounts.

Learn about Bizagi Automation in action across the supply chain, from procurement to logistics & distribution

3. Reduce cycle time

Introducing process automation to the procurement process will help to shorten the procurement lifecycle by ensuring it is as efficient as possible. APQC’s Sourcing and Procurement: Blueprint for Success report showed that there can be a significant difference in cycle times, with top performers taking an average of five hours to place a purchase order, while bottom performers can take up to 48 hours.

Modeling the process prior to automation will help to eliminate any bottlenecks in the process and ensure that all the necessary steps are adhered to. Once the process is streamlined, automation can add efficiency by automating tasks within the evaluation processes which previously would have been completed manually, such as uploading request forms to the system, distributing contracts, and confirming orders. There is a significant amount of administration involved in the procurement process, so freeing employees up from these tasks means they can focus on other value-add tasks.

Process automation also reduced the chance of errors and omissions when collating information, so the back-and-forth of correcting mistakes is eliminated. The entire process will be completed faster and more efficiently, so your organization can benefit from faster purchase order processing, faster approvals, and ultimately faster receipt of goods.

 

4. Minimize risk

APQC reports that “Within procurement, the use of an approved vendor list is one key practice for driving consistent processes. The approved vendor list contains all suppliers that will be accepted to do business with the organization.”

A leading global chemical manufacturer ensures that their approved vendor list is always up-to-date as part of their risk management exercises. The procurement team runs an evaluation of all their providers by sending out an annual questionnaire to assess if the providers are reliable and good value for money. Bizagi helps to drive this process by gathering the information and automatically updating the rating based on the information provided by employees.

However, having a reliable vendor list is only the first step to minimizing risk. Organizations also need to ensure that employees are compliant with the procurement process. According to APQC’s research, only 43% of organizations have documented consequences for applying noncompliant sourcing processes to a very great extent. These maverick buyers can have a significant impact on the bottom line, with the total cost for the procurement process group per $1000 purchases for those with a significant number of maverick buyers being $40.42, compared to just $21.73 for the top performers who adhere to the procurement process, nearly double the amount.

 

5. Eliminate transaction disputes

With multiple stakeholders involved, including procurement management, evaluation committee, arbitrator, and vendors, it’s important for all parties to be able to have access to a single point of truth. This is particularly important if a transaction dispute should arise.

Bizagi orchestrates all systems and provides a central location to reference the process to ensure that goods have been delivered in time, to the desired standard, and payments have been settled. The process is mapped out for complete end-to-end visibility, so every point in the process can be reviewed with ease. Automated audits also guarantee that all documents from purchase requests through to approved invoices are referenceable.

 

Optimize procurement and other processes in your supply chain

Procurement is just the tip of the iceberg. From vendor management to quality assurance and everything in between, process automation can provide multiple benefits for your organization. If you would like to find out more about how a low-code platform can help transform your supply chain, download our free ebook, The Strategic Guide to Supply Chain Automation for Manufacturing.

In addition to insight on how to optimize your supply chain, you will also learn:

•    3 steps to building more resilient operations 
•    Best practices to tackle the key issues faced by manufacturers and retail organizations
•    How Bizagi's low-code automation platform has helped leading organizations transform their supply chains

 

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