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.
What Is the Procurement Process?
In short, procurement is an overarching term that refers to all the steps a business takes to obtain the goods and services that it needs. This includes identifying the most appropriate vendors, reaching agreements with suppliers, ordering, paying for, receiving and documenting the goods and services that support the organization’s operations. As such, procurement is a workflow that involves multiple processes, policies, guidelines, and tasks.
Obviously, the exact process varies from one business to another. Nevertheless, it’s a key business activity and an optimized process has many benefits. We’ve discussed the procurement process in detail elsewhere – read the article below to learn more.
What Is Procurement Process Automation?
Procurement automation optimizes and speeds up everyday workflows. It’s essentially workflow automation applied to the various processes in the procurement department – often collectively referred to as procure-to-pay (or P2P).
A digital workflow management system offers numerous benefits since it allows your people to spend less time on paperwork and more time on the things that matter. Automation also means they have to deal with fewer errors and omissions, and the business receives the goods and services it needs faster.
Automation allows you to track your spending and make more efficient purchase decisions, particularly in large organizations with many moving parts, such as K-12 schools, universities and colleges. With numerous departments buying books, computers and other hardware, lab supplies, paper and ink for printing and copying, maintenance and cleaning supplies – to mention a few – procurement can easily spiral out of control without effective governance.
Automating the workflows involved enables you to select the best suppliers, order in bulk (and benefit from cost savings!) and put automated caps on departmental spending, encourage more careful budgeting and require higher-level approval for purchase orders exceeding a preset amount.
Moreover, automating the approval routing ensures that the procurement process runs smoothly and isn’t encumbered by avoidable bottlenecks.
Procurement automation also allows you to take advantage of early payment discounts, which can add up to significant cost savings over time.
Automation has so many advantages that it’s no wonder that the procure-to-pay process is increasingly going digital.
Top Four Procurement Processes Every Business Should Automate
Every company deals with purchase orders. In our experience, it’s the single most common workflow that customers automate. That’s because it’s a perfect example of a routine, everyday process ripe for automation.
- Most organizations perform purchase order approvals with reasonable frequency.
- By and large, it’s not a hugely complex workflow.
- At the same time, it involves multiple stakeholders.
Automating this process has numerous benefits. Faster, more accurate PO approval means faster, more accurate procurement. That translates to projects getting delivered on time and on budget. It also means product releases that meet their deadlines.
A purchase requisition is a common internal workflow that employees use to request approval for a purchase. Typically, this simply means their direct manager. However, the process frequently requires additional approval stages. For example, businesses often require VP approval if the value of a purchase request exceeds a predetermined amount.
An approved purchase requisition ends up with the finance department, which uses the information in this document to generate and issue an official purchase order.
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 because materials aren’t available when needed.
Note that while they’re related, purchase requisitions and purchase orders are different and shouldn’t be confused.
3. Invoice Approvals
Invoice processing is another core component of the procurement process. After the business issues a PO, the vendor ships the ordered items. At this point, the vendor sends the business an invoice for the provided goods.
Invoices typically go through an internal approval process before the finance department sends any money. The approval process varies by company but goes something like this:
- The finance department verifies the invoice against an approved purchase requisition or issued PO.
- They notify the employee who placed the order. The employee checks to ensure that the order was properly fulfilled and signs off on the invoice.
- Depending on internal business norms, the invoice may require one or more additional approval stages.
- Finance receives the final approved invoice and pays the vendor.
No matter what your process looks like, good invoice approval software can automate the process, saving your and your team time and costs.
4. Record Keeping
While record keeping isn’t technically a process, keeping proper records is an essential activity for every business. In the event of a dispute or an audit, organizations need to be able to produce documented purchase orders and invoices. Additionally, businesses often use these records to analyze purchases to optimize their spend management.
In spite of this, a surprising number of organizations still process documents manually. In some cases, they still print out POs or invoices and keep them in filing cabinets. More often, they file away an Excel sheet in a folder or in an email inbox.
Neither of these is a particularly good solution. Paper or inbox documents are notoriously difficult to find when needed. More importantly, they lock up important data in formats that are difficult to analyze.
As a result, many organizations use a document management system (DMS). Automating your everyday procurement processes only to manually save the documents into your DMS would be ludicrous. Instead, make sure that your workflow automation software generates and saves electronic documents into the DMS. The system properly indexes all the documents so it’s easy to find a document when you need it.
How Should You Automate Procurement Processes?
Generally speaking, there are two approaches to automating procurement. You could invest in an e-procurement solution such as SAP Ariba or Zycus. To be sure, systems like these provide rich, powerful functionality. However, they are expensive to procure, and as a general rule, they’re difficult to customize. In all likelihood, you’ll have to adapt how you do business to fit the way the software functions.
Alternatively, you could use low-code workflow automation software like frevvo. It can help you replace your existing paper- or Excel-based procurement process with a fully electronic version.
Modern workflow automation software is highly visual, intuitive and easy to use. You won’t need experienced programmers, a large budget or a months-long project to automate processes.
Digitize Procurement Processes in 4 Easy Steps with frevvo
Here’s how you can automate these everyday processes with frevvo’s easy-to-use visual workflow automation software.
1. Install a Pre-Built Template
Get a jump start with one of our pre-created, tested templates for common workflows like purchase orders, purchase requisitions, etc. Alternatively, you can start from scratch and build your own brand new procurement app.
2. Customize Forms, Business Logic, and Routing
Next, edit the template and customize it to meet your needs:
- Use the drag-and-drop form builder to design your own custom forms. Make use of an array of powerful e-forms capabilities such as sophisticated layouts, a rich control palette, e-signatures, and attachments.
- Need dynamic behavior? It’s a piece of cake with our Visual Rule Builder. You can easily perform calculations, create conditional sections, and pre-fill fields without coding.
- Setup the routing visually with the drag-and-drop workflow designer. Define users and roles to route steps to, set up conditional routes and more.
- Generate PDF forms and documents including custom documents like a Federal W-4 that maps form data to PDF fields.
- Your forms and workflow will automatically work on all mobile devices.
With frevvo, you have access to a vast array of capabilities that will help you design automated processes that meet real-world business needs.
3. Deploy on frevvo’s Cloud or On-Premise
Now that you’ve created your own electronic purchase order, invoice approval or other procurement workflow, it’s time to publish it. With frevvo, you have flexible options.
You can deploy it in our robust, secure cloud environment. This way, you don’t have to worry about upgrades, maintenance, security patches, etc. We take care of all the details so you can simply focus on your business.
However, we understand that sometimes you may need to work on-premise. Perhaps the system needs to connect to an internal system that is not available to the cloud, or maybe the process data is so sensitive that IT prefers to host it in your data center. No problem! We offer the exact same software in an on-premise version that you can install and manage yourself.
We recommend that you start small by rolling out your new workflows with a trial group. People are accustomed to doing things a certain way and change can be challenging. Collect real user feedback and take the time to incorporate your findings into the process, and iterate until your users are comfortable with the new process. It might take a while, but you’re much more likely to end up with a procurement process that people actually use.
4. Optimize and Improve the Process
Once the workflow is in use across the organization, make sure that you monitor usage, measure efficiency and ROI. You’ll always find opportunities to iterate and improve your process over time as business conditions and requirements change.
Use frevvo’s built-in reports together with easy-to-integrate third-party analytics to continuously optimize your procurement processes for your business needs.
frevvo Has the Features You Need
From visual tools to PDF generation to security, mobile responsiveness, and transparency – you’ll find that these features are essential as you continuously improve and integrate your procurement processes.
Perhaps your first process doesn’t make use of SQL integration, but a later iteration seamlessly integrates your database with your forms. Maybe your early workflows don’t connect to your document management system, but a later version automatically files away copies of all your documents.
As you start automating more processes to use electronic forms and workflows, you’ll find that the list of business requirements grows.
Get Started Today
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.