It’s essential to have an effective procurement process in place. It will help your procurement team reduce unnecessary expenses, and streamline and speed up the entire process.
Regardless of the size of your company, an inefficient procurement process can create many issues for you.
Companies struggle to maintain proper documentation and communication. Also, they often experience inefficient data entry. That’s because of the absence of a streamlined process and lack of access to suitable tools.
This leads to other issues such as the duplication of payments and procurement fraud. Many companies also struggle to find high-quality materials at low costs.
In addition to this, companies also find it challenging to cut costs on services as well.
The Cost of Poor Procurement Practices
Poor procurement practices can lead to an increase in costs, sometimes up to 5X for companies. Obviously, no company wants to spend more than their dedicated budget.
As part of poor procurement practices, 54% of companies still use paper-based invoice processing. This leads to a huge waste of time and resources.
Poor procurement practices and ineffective tools can also lead to the loss of your employees’ valuable time. Businesses in the U.S. waste 32 million man-hours per year due to ineffective procurement processes.
48% of companies face the challenges of ineffective processes and manual data entry.
Fix the Issues by Automating Procurement Process
The main cause of the issues mentioned above is a lack of efficient tools and processes. However, you can fix this problem if you automate your procurement process.
First, you need to automate your entire procurement process. You need to leverage the best possible tools to prevent fraud and decrease human error.
By automating the procurement process, you can cut down the overall cost and streamline the invoice approval process. This can also reduce cost-per-invoice and human errors by nearly 90% and 40%, respectively.
Automation will help you increase transparency in transactions, improve compliance, and increase the productivity of your employees. It can also improve your data storage system and reduce paper storage costs.
With the help of automation, you can grab 75% of the available discounts and successfully maintain a better relationship with each of your vendors.
With a automated procurement process in place, it helps you streamline and develop an efficient purchase order process. It enables you to eliminate time-consuming manual steps. You can also add the provision of e-signature and reduce the time it takes to complete the purchase order process.
Automation also allows you to set alerts for primary members in the process and remind them to take instant action.
When compared to a manual procurement process, automation helps you control the duplication or fraud of contracts. With the help of automation, you can create a centralized data repository which can be accessed by every department in the company.
The centralized system helps your procurement team track contract documents efficiently. Thus, helping them minimize the duplication or fraud of contracts.
Automating the procurement process helps you understand the purchasing patterns of your business. As a result, it will help you negotiate with your vendors and save on purchasing costs.
Check out the infographic below by PurchaseControl to learn more about the significance of technology in resolving procurement issues.