Posted in Procurement Automation

Your Ultimate How-To Guide to Procurement Automation

More than half of Chief Procurement Officers (CPOs) admit that the underutilization of automation software in procurement processes is a huge problem that needs remedying.

Complex manual workflows are time-consuming and full of errors, slowing down the whole procurement pipeline.

In light of this, 70% of procurement professionals are looking to optimize procurement by switching to digital processes.

By digitizing and automating your procurement processes, you can significantly accelerate procurement, cut out errors, and reduce labor costs.

Read on to discover the easy steps you need to take to automate procurement, along with the top reasons procurement automation software is a must-have.

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What Is Procurement Process Automation?

Procurement automation is the process of automating manual, repeatable steps and labor-intensive tasks in the procurement process.

By helping procurement workflows to self-execute, procurement automation frees up the procurement team to focus on other critical business activities, while speeding up processing and reducing errors.

There are several stages of the procurement process that can be automated.

For example, procurement software, like frevvo, enables you to create digital forms that auto-populate with correct information pulled from existing databases and cost centers.

Forms will also auto-validate to ensure the data is correct. 

Both of these automations speed up the time it takes to fill out forms and ensure accuracy.

Another way to increase efficiency in your procurement system is to use automatic routing to direct procurement documents to approvers who can sign documents online using e-signatures.

Automatic notifications alert approvers to new documents that need signing, while automatic reminders prevent approvers from forgetting to sign.

With frevvo, you can also integrate your procurement workflow with your record-keeping software so that all records are kept up-to-date automatically. This means no more compliance issues due to outdated or incorrect records. 

In short, automation ensures that the procurement process runs smoothly and isn’t hampered by bottlenecks.

What’s more, procurement automation software allows you to track your spending and make more efficient purchasing decisions, particularly in large organizations with many moving parts.

Automation has so many advantages that it’s no wonder digitization of the procure-to-pay process is increasing.

4 Procurement Processes Every Business Should Automate

1. Purchase Order Processing

Purchase orders are a perfect example of a repeatable process that’s ripe for automation.

  • Most organizations perform purchase order approvals with reasonable frequency
  • By and large, it’s not a hugely complex workflow
  • Automation cuts back on repetitive tasks for multiple stakeholders
  • PO processing is easy to automate with purchase order software

2. Purchase Requisitions

A purchase requisition is a common internal workflow that employees use to request approval for a purchase. 

The process frequently requires multiple approval stages, which could be accelerated with automation. 

Automating purchase requisitions has similar benefits to automating purchase orders. It frees up employee time for more important pursuits and ensures that projects aren’t delayed by missing materials.

3. Invoice Approvals

Supplier invoices typically go through an internal approval process before the finance department sends any money to the supplier. 

Invoice approval software can automate the invoice approval process, which saves your procurement team time and makes it easy to approve invoices from anywhere.

4. Record-keeping

It’s important to keep accurate and complete records to stay compliant.

Paper record-keeping processes aren’t just slow — they’re prone to errors and lost paperwork.

With an automated procurement tool, you can integrate your existing systems to automatically update all records for a fully complete, highly-accurate audit trail.

How To Automate Your Procurement Processes

Increase both the efficiency and effectiveness of your procurement processes using intelligent automation technology, like frevvo.

Here’s the process of automating your procurement cycle in six simple steps.

1. Model Your Current Procurement Process

To work out where you can improve efficiency through automation, first you need to map out your current procurement workflow.

60% of business leaders believe that looking into their current procurement processes before investing in transformation would give them the clarity to migrate to digital solutions more successfully. Despite believing this, 82% of them miss this stage completely.

Don’t be tempted to skip this step. It will help you to see where repeatable tasks can be automated to speed up the process.

Try using Business Process Modeling Notation (BPMN) as a way to map out the steps of your workflow as a flowchart.

Example of BMPN on frevvo

Remember to map out all steps, including:

  • Needs identification
  • Purchase requisition
  • Supplier research and selection
  • Supplier negotiation
  • Purchase orders
  • Invoicing and payments
  • Delivery and auditing
  • Record-keeping

2. Audit This Process

Now that you have a map of all the tasks and stakeholders involved in each step of the procurement process, you need to identify points in the workflow that are causing bottlenecks.

Often, bottlenecks appear at points where there’s intense manual labor, such as filling out forms or validating information. 

Automation functionalities, such as auto-population and auto-validation, can cut these stages out and significantly accelerate the workflow while reducing errors.

Look for bottlenecks in the process that slow it down or increase costs, such as:

  • Which stages are the longest and slowest? 
  • Which are most prone to error? 
  • Where are added costs being incurred throughout the process?

Likewise, ask yourself where there are repeatable tasks, such as copious data entry or points when employees have to manually take paperwork to approvers.

Tasks that are repeated the same way each time can generally be automated.

3. Identify Key Areas for Automation

There are two steps to automating these bottlenecks and repeatable tasks. First, you need to digitize these processes. Then you can automate them.

Look at where you can switch from manual to digital processing in your procurement process.

For example, all manual purchase request forms and purchase orders can switch to dynamic digital forms. 

Not only does this enable you to access forms online and keep digital copies, but it also means you can link forms to your existing databases to auto-populate forms and auto-validate data.

When it comes to approvals, digitizing forms and adding e-signature functionalities means that procurement documentation can be approved from anywhere.

You should also switch to digital invoicing and look to move manual record-keeping to digital software.

Now, look at the dynamic parts of the process where one stage of the workflow moves to the next. What can be digitized and automated to speed up the flow?

Staff shouldn’t be sending forms by email, or worse, by hand. With automation software, you can automatically route forms and documentation to the next stage in the process, as well as send them to approvers to sign online.

4. Choose the Right Procurement Automation Software

To automate your procurement processes, you’ll need sophisticated procurement automation software, like frevvo.

When searching for automation software, 40% of organizations agree that training and set-up expenses are the biggest blocks.

Look for technology that’s easy to use, so that your staff requires only minimal training. It should be simple to migrate to and straightforward to integrate with your existing systems. This ensures that you won’t waste time setting it up.

To enable access from anywhere, you’ll want cloud-based, mobile-ready software. This is especially important if you’re working with remote teams. 

Lastly, make sure your automation tool has a wide range of functionalities to enable dynamic digital form creation, complex routing, and online approvals.

To cover all these requirements, Safety Technology Holdings chose frevvo.

With multiple locations worldwide, the software company needed automation software that could be accessed from anywhere.

This was especially important since purchase requisitions had to follow a complex routing structure. They would send forms from employees to managers, and then on to either the VP, CFO, or CEO — all of whom are in different geographical locations.

Thanks to frevvo, Safety Technology Holdings was able to get rid of its mix of InfoPath forms, custom-built applications, and PDF processes that were slow, tedious, error-prone, and wasteful.

Now, the software company enjoys an automated routing system that’s accessible from anywhere, on any device. This means no more chasing paperwork, and approvals happen on time.

5. Build Procurement Automation Workflows

Once you’ve picked your software, you’ll need to build out your procurement workflows. 

Take each individual workflow within the whole purchasing process and build it individually.

Start by building the overall workflow, adding in all the approval steps the process runs through. 

With a comprehensive tool, like frevvo, you’ll be able to add complex conditional routing, based on your approval structure using the simple drag-and-drop workflow builder.

example of a conditional PO process on frevvo

Next, build the digital forms that will need to be filled out and signed throughout the process. Luckily, with frevvo, there are plenty of built-in templates to choose from, so you don’t have to start from scratch.

If you do want to build your own, however, this is super simple thanks to the straightforward drag-and-drop form builder.

Setting up business rules on frevvo

After this, move on to add any complex business rules to dynamically modify each form’s behavior.

Finish off by generating PDF forms from the workflow data.

6. Measure and Improve

How will you know if your automated process is faster, less error-ridden, or cheaper? 

Make sure you pinpoint key performance indicators (KPIs) and measure these regularly to monitor the overall performance of your procurement workflows.

Not only will these measurements help you to see how automation improves manual processes, but they will also help you to pinpoint future areas where you can further improve your procurement workflows.

You may notice that some steps are unnecessary. Alternatively, you may decide you need multiple approvers for each step in case one is busy or out of the office. 

Only by consistently measuring your KPIs will you notice where your procurement process is bottlenecking and where you can implement new tweaks to improve efficiency even further.

Why Should You Use Procurement Automation?

Procurement automation doesn’t just speed up the procurement process; it also reduces errors, increases cost savings, and makes it easier to audit your workflows.

Here are the key benefits of procurement automation.

1. Speeds Up the Procurement Process

Manual procurement processing is slow, due to hefty data entry requirements and delays in approvals.

42% of business leaders agree that automation can accelerate workflows by speeding up the time it takes to complete repetitive tasks.

Specifically, procurement automation can speed up the process by auto-populating and auto-validating forms to cut back on data entry. 

You can also automatically route forms, so staff no longer have to submit documents manually. Automatic notifications and reminders prevent delays in the approval process.

Just look at how Pivotal accelerated its procurement.

By implementing frevvo’s automation software, the technology company switched from manual purchase cards and purchase order workflows to automated processes.

Now, thanks to integration with Google Sheets, data is pulled from Pivotal’s cost centers and automatically routed to the correct approver.

2. Cuts Back on Costs

When your procurement processes are heavy with manual data entry, you end up paying for a lot of labor hours. This is especially true if staff have to spend extra time remedying errors or physically chasing approvals.

31% of business leaders agree that automating workflows reduces labor costs.

In fact, cost-effectiveness is the number one benefit of digital procurement processes.

3. Reduces Clerical Errors

Manual processing is error-prone, meaning staff often have to spend extra time to remedy errors and redo lost paperwork. This leads to added labor costs.

Half of all business leaders and employees agree that you can reduce manual errors with automation software. 

By switching to frevvo, ONEIL significantly reduced procurement errors.

The company had previously been using InfoPath for purchase requisitions, but the process was peppered with unexplained errors.

Now, thanks to frevvo’s dynamic digital forms, purchase request forms auto-populate and auto-validate, cutting out errors and saving time on data entry.

4. Helps to Mitigate Procurement Risks

There are many procurement risks to consider: late or missing paperwork, late delivery of goods, incorrect products, non-compliance, and so on.

By automating the procurement workflow, you can ensure that you have a full, correct audit trail that tracks all actions along the pipeline.

This helps to mitigate risks and improve accountability, which is why 72% of business decision-makers agree that digital processing increases business resilience.

Get Started Today

Procurement automation saves time and money, while cutting back on costs, improving record-keeping, and streamlining supplier relationships.

By switching to procurement automation software, you can modernize your procurement workflows, so your procurement team has more time to focus on more important areas — no more chasing approvals.

Automating your procurement processes is easy with frevvo. Sign up for a free 30-day trial, install a template, and get your first process in place in under an hour.

Author:

Ashish Deshpande has worked in the process automation space for over 20 years. He has been instrumental in successfully deploying frevvo’s software at hundreds of organizations such as HBO, New York University, and Boston Public Schools. Ashish has contributed to leading publications such as Forbes, business.com and readwrite.com. Ashish received a PhD in Computer Science from Yale University, and a Bachelor of Technology in Computer Science and Engineering from the Indian Institute of Technology, Mumbai, India.

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