an image of the supply chain of goods and impovements made via procurement automation software

Top 10 Benefits Of Procurement Automation

Traditionally, the procurement process requires a great deal of manual effort as businesses commit resources to find and

Traditionally, the procurement process requires a great deal of manual effort as businesses commit resources to find and acquire goods, services, or work from external sources. These agreements require further attention as contracts need to be drawn, terms agreed to, and those agreements are managed throughout the life of the manufacturer/supplier relationship. This often extends far beyond one source to incorporate many external suppliers who can fulfill needs when another supplier cannot or for materials of varying quality and composition. The process has been most often achieved through a tendering or competitive bidding process. Fortunately, modern tools have enabled manufacturers to hand off many of these manual tasks to procurement automation solutions. The resulting procurement process improvement frees valuable internal resources for business-critical decision-making and strategizing efforts. Here are our top 10 procurement automation use cases to help start automating the procurement process in your organization.

1. Direct Procurement Tasks: Minimizing The Manual

Spreadsheets, faxes, and emails have long been staples of direct procurement processes. unfortunately, the variability of the results can lead to an unreliable supply chain. There is simply too much opportunity for data entry errors, lost communications, and missed deadlines. This poor visibility in your supply chain and the procurement process can prove to be a significant hurdle to overcome and even potentially cause a halt in manufacturing and machinery. Production stoppages can cost millions in labor, expedited shipping costs, and poor customer satisfaction. By minimizing the manual entry of data and other associated tasks, procurement automation improves your business performance from the inside out.

2. Procurement Automation Elevates Supplier Performance

The benefits of working with a quality supplier cannot be overstated. suppliers are often overlooked as a critical business component as they can impact the functions of your entire organization. Unfortunately,  the manual nature of most procurement management makes it difficult to stay on top of past-due or poor-quality materials.

By operating with outdated and disparate tools, there is no visibility into supplier on-time performance and responsiveness to PO acknowledgments and confirmations. Communication between buyers, suppliers, and stakeholders turns into a moving target when what you need is a predictable performer. Automation tools built specifically for the procurement process bring clear and reliable communication channels to the forefront while helping to reduce errors, missed deadlines, and unhappy customers.

3. Supplier Accountability Improves

Procurement automation solutions hold historical data for you to use when evaluating which suppliers are keeping in line with the standards you have set for your relationship. Scorecards keep track of what matters most, including:

  • Supplier price variance
  • On-time delivery
  • Quality
  • Responsiveness

These scorecards ensure that ISO-certified companies maintain adherence to an in-depth supplier scoring system to remain ISO compliant. If your suppliers are delivering below your expectations, you can see a complete history of events leading to a downgrading of their rating. This makes having conversations about delivery easy, thanks to concrete historical data you can access from anywhere.

4. Procurement Automation Improves Collaboration

The simplicity and clarity of purpose-built procurement automation tools represent a monumental shift in supplier performance and supply chain efficiency. These systems are designed to integrate seamlessly with your ERP system. They deliver the ability to see and react to changes in real time from a single source of data. By automating your needs, from manual buying processes to performance analytics, business becomes streamlined at every level. You’ll find tremendous benefits through procurement automation in:

  • Collaboration – Increase collaboration between the buyer and supplier.
  • Visibility – Update data automatically in the ERP and view the information in real time.
  • Performance – Enhance performance with more accurate information and consistent communication and alerts.
  • Transformation – Improve productivity and supplier performance with better internal resource allocation and more accurate data.

5. Purchase Order Systems Become Streamlined

Automated purchase order management systems extend the power of your ERP. This provides you with the ability to manage direct spending and buyer-supplier relationships. when purchase orders are created these systems expedite purchase order acknowledgments, track due dates, and status changes, and alert your suppliers to important PO changes. All purchase order details and buyer/supplier communications can be tracked directly with each purchase order. Just like with EDI, updates are sent in real-time and immediately sync to your ERP.

6. Better Document Management

As operations expand, more trading partners and suppliers are brought into the fold. Communications, contracts, purchase orders, invoices, and a host of other documents are being routed back and forth between internal and external resources every day. Procurement automation tools will make sharing and managing all types of documents with your suppliers a hassle-free endeavor. By ensuring your suppliers automatically receive the latest revisions of manuals, prints, bill-of-materials, and specifications, they are better able to meet your needs and deliver on their obligations. Uploading your documents into these procurement automation tools will share the latest version of existing documents with your supplier automatically. New documents being uploaded need initial permissions and routing protocol set up, but it’s on autopilot after that, in most cases. You can even require a supplier to confirm receipt of your document and easily send reminders to suppliers who are slow to accept, further aiding in accountability and supplier performance.

7. Advance Shipment Notifications, Simplified

Completing detailed Advance Shipment Notification (ASN) documents, saving them to a given platform, and automatically sending them to buyers before shipment is made easy with procurement automation. The tools help buyers and receiving departments improve performance as it pertains to incoming supplier shipments with standardized barcodes and shipping labels. A quick scan of a barcode and receivers instantly know the contents of any box.

8. Superior Quality Control

Procurement automation tools track the incoming inspection of materials, placing parts in a quality queue and flagging them for review to simplify your quality control processes. If the item(s) fails inspection, the reviewer inputs the reasons into the tool and collaborates with the supplier to disposition the material.

9. Easy Request For Quote (RFQ) Management

Spreadsheets only slow things down when you want RFQs promptly and intuitive layout. With procurement automation, you can send a request for a quote to your suppliers to track every step of the way, automatically. A comprehensive view of every supplier on your list will allow you to make an informed decision without having to jump between multiple sheets. Tracking responses that align with the best pricing and scorecard rating make it easy to compare offers and choose the suppliers who best fit your requirements.

10. Mobile Utilization Of Procurement Automation

Mobility is key for any modern organization. If you can’t make decisions on the move, you are essentially desk-bound. That means, if you’re not in the office, chances are you’re not taking action. Today, procurement automation solutions place simple and intuitive smartphone apps in your hands. These native-developed applications assist in managing procurement and purchase orders from anywhere, at any time. Leveraging quicker access to view, acknowledge, and communicate procurement data where the data is being consumed allows you to make smarter business decisions, faster.

Want to know more about procurement automation? Get in touch with the experts at Encompass Solutions using the contact us link below. We’ll help you identify the ideal procurement automation solution for your business’s unique needs.

About Encompass Solutions

Encompass Solutions, Inc. is an ERP consulting firm, NetSuite Solution Provider, and Epicor Platinum Partner that offers professional services in business consulting, project management, and software implementation. Whether undertaking full-scale implementation, integration, and renovation of existing systems or addressing emerging challenges in corporate and operational growth, Encompass provides a specialized approach to every client’s needs. As experts in identifying customer requirements and addressing them with the right solutions, we ensure our clients are equipped to match the pace of the Industry.

Sean Balogh

About Sean Balogh

A marketing professional working hard to deliver relevant and engaging content to audiences in education, technology, and manufacturing.