Purchase orders play a key role in ensuring you have the goods and services you need to run and grow your business.
And you likely already have a process in place to complete, send, and get them signed.
But, while relying on a manual purchase order process may have worked when your business was just starting out, as you scale it becomes more time-consuming and frustrating for everyone involved. It hampers your ability to get work done.
Do you need to streamline procurement in your organization? Are you wondering what best practices would help you improve purchasing processes further?
Well, I can only imagine the weight on your shoulders.
Your company needs to source goods and services to deliver what’s been promised to customers. Organizing it all – not to mention, doing it faster and faster while continually reducing costs – rests entirely with you.
And that’s not the only pressure you’re under. Even the shortest supply chain delay might bring the entire production to a halt.
But I can show you how to avoid those disruptions.
After reading this guide, you’ll understand the most common challenges and bottlenecks in your procurement processes. You’ll also learn what best practices in procurement to implement to eliminate those bottlenecks once and for all.
Purchase orders (POs) play a vital role in every organization, whether it’s a university ordering library books, a company procuring raw materials for manufacturing, or an agency purchasing services from a vendor.
POs are also one of the most admin-heavy business processes. They’re prone to errors, bottlenecks, lost paperwork, unnecessary back and forth, and maverick purchases.
This can lead to incorrect goods or service delivery, delayed orders, overspending, and even outright fraud, if Purchase Order tracking systems are not in place.
According to The Hackett Group, most organizations can reduce their operational costs by as much as 45% by implementing digital procurement tools for smart data capture and workflow automation.
Sourcing the raw materials, components, products, and outsourced services needed to conduct your business is a core part of any organization’s operations.
While some business owners would argue that a smaller pool of vendors translates to better terms, service and more personal attention pricing, a growing number of businesses are making a strategic shift away from single-source supplier agreements in response to global events that threaten to disrupt supply lines or raise costs. As a result, multi-sourcing is gaining popularity as a procurement model.
Driven by organizations that seek to mitigate risk as well as businesses that seek more flexible, innovative and competitive supplier relationships, multi-sourcing offers a number of attractive advantages.
In March 2019, the Department of Justice announced the indictment of a Lithuanian man who used invoice fraud to steal $123 million from Google and Facebook. He managed to execute the fraud through business email compromise: he posed as trusted vendors and sent invoices for services that never took place.
Invoice fraud is on the rise. According to the FBI, email fraud increased by 136% between December 2016 and May 2018. While Google and Facebook managed to recover their funds, the majority of businesses are not so fortunate, and sadly, small-to-medium-sized businesses are often targeted because scammers know that they don’t have the same resources to allocate to combating fraud as larger companies.
Procurement is a core activity for many businesses. After all, businesses use materials and services in order to create and deliver their own products and services.
Yet, in spite of the fact that it’s such an integral operations process, procurement is persistently one of the most disorganized activities for many organizations including institutions of higher education. Often, this is because procurement’s top priorities haven’t evolved to align with the priorities of a modern business.
It’s hard to blame the procurement department. In many organizations, they’re still stuck using Excel spreadsheets and email for routine processes. Without automation, employees in charge of procurement are still spending a lot of time on paperwork, and simply don’t have the time to think bigger picture. Concerns such as Corporate Social Responsibility or reducing everyday risks to the business unfortunately take a back seat to simply getting through all the routine tasks.
Whatever the size of your business, process automation helps increase agility and sets your business up for success in the 21st century.
A purchase order is one of the necessary types of paperwork that many business owners dread. The purchase order process is often long and complex and requires large amounts of back and forth communication. Too often, information gets lost in this type of disorganized communication – and even when it doesn’t get lost, it’s difficult to keep track of everything.
In part 1 of this series, we discussed the latest trends in procurement for the 21st century. Building upon that, we’ll now highlight some modern digital procurement technologies and help you choose the right ones for your organization.
As more organizations are leveraging procurement technologies to increase operational efficiencies, reduce costs, and respond to market demand, it’s no longer an option to ignore the various digital transformation tools if you want to stay competitive and improve profit margins.
However, with the many solutions on the market, choosing the right technologies can be quite a daunting task.
To get the most of your IT budget, you should first devise a clear digital transformation strategy to guide the selection of technologies for your organization.
Here are some tools to consider based on the latest trends in procurement technologies:
Recent advances in technology are creating profound impacts on many businesses activities. In particular, digital transformation is rapidly changing back-office operations such as supply chain management and procurement. Digitally transformed organizations increase efficiency, lower cost, and adapt to fast-evolving customer expectations.
To stay relevant, competitive, and profitable, businesses need to keep pace with new technologies. Procurement is no exception. New technologies facilitate e-procurement, contract repository, supplier performance management, spend analysis, supplier information management, AP automation, business networks, contract authoring, and more.