Fast forward to 2019, and things seem to be pointing in a different direction. The latest Deloitte study found a clear shift in procurement, with an accelerated pace of change in digital procurement. While cost reduction remains a priority (78%), there was a clear emphasis on innovation and value as well.
So with that in mind, here are some key statistics to focus on as we move toward 2020 and beyond.
In life or in business, risk taking has benefits and may even be an essential ingredient of success. Quite the opposite when it comes to procurement – the last thing you want is risk. A smoothly functioning procurement process is standardized and dependable.
Purchase orders (PO) and purchase requisitions are extremely common documents that practically every business uses. They help businesses control costs, ensure that employees cannot bypass business standards and that the business gets the best possible deal. Problems are easier to track down. If the vendor delivers the wrong items, the signed copy of the purchase order proves what the business actually ordered.
Purchase order and invoice processing are basic functions every organization performs as part of its day-to-day operations. Employees in the finance department handle POs, get them signed, send them out to vendors and process related invoices on a routine basis.
These processes can often have complex business requirements:
Organizations of every stripe – small businesses, schools & colleges, and even some large companies – continue to email Excel sheets to approve purchase requests and issue a purchase order. While that’s better than paper, Excel still has numerous disadvantages particularly in today’s mobile-centric, data-driven world. You need a fully digital solution.
Let’s face it – even though procurement management is an essential part of successful businesses, it’s one of the most disorganized activities at many organizations.
More often than not, inefficient manual processes are the root cause of these challenges. These messy and wasteful processes causes delays, errors, and workarounds that result in much larger downstream issues such as:
Procurement is a core operational function of any business. Without the ability to obtain the necessary materials, a business cannot manufacture its products.
Traditionally, procurement’s most important goal was to lower costs. However, the pace of modern business has accelerated dramatically. Today’s businesses also operate on a global landscape sourcing materials and selling products across the world. That’s forced procurement to become a digital, measurable function aligned with overall corporate priorities.
Procurement vs Purchasing vs Supply Chain Management – business people tend to use these terms interchangeably. While they are related and are all part of a company’s finance or accounting function, there are differences.
Let’s understand each one and the differences between them in more detail.
Procurement is an essential component of any business. In order to operate effectively and produce its own goods and services, every organization must procure various goods and services from third party vendors.
Purchase requisitions and purchase orders (“POs”) are both key documents in an efficient procurement process for any business. They allow teams to plan purchases adequately, plan budgets, and provide proof of spending in case of financial audits.