Recent advances in technology have created 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.
Today, the kinds of software, hardware, and peripherals available has exploded. It’s not always easy to identify the right technologies in which to invest so you can maximize the ROI for your IT budget.
To get the most out of the latest technologies, you must first understand the top trends that are impacting the procurement process. That will help you select the right tools that meet the needs of your organization.
As digital transformation sweeps across the globe, organizations are looking to use technology to improve efficiency in all departments. The procurement department, which owns the overall procure-to-pay (P2P) cycle, is no exception. Digital or e-procurement has the potential to hugely impact P2P.
What Is Procure-to-Pay?
Procure-to-pay is an umbrella term for the process of requisitioning, ordering, purchasing, and receiving goods or services for an organization. It’s a standard, necessary part of any business operations that may or may not involve multiple stakeholders depending on the size and hierarchy of the company. The process usually requires a lot of paperwork and time to complete fully.
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.
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.
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, purchasing, and 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.
Effective procurement processes save costs, aid compliance, ensure you work with reputable suppliers and eliminate delays and mistakes. Procurement also helps modern organizations attain non-financial goals such as sustainability, reduce their environmental footprint and burnish their green credentials.
Digital procurement processes can be measured through mutually agreed upon metrics. The resulting alignment with corporate priorities elevates procurement into a strategic function within the organization.