Taking the complexity out of procurement processes

Five ways an integrated procurement solution keeps it simple

by Foy Mainor

Whenever we can reduce complexity, we increase accuracy and efficiency. It’s true for workers constructing a building, for technicians fixing a piece of equipment, and it’s true for managing your organization’s procurement process. Too often, organizations either have no formal procurement process, or they have a process that is overly complicated and cumbersome, both of which can lead to costly maverick spending.

Below are five common procurement challenges businesses face – and how the right procurement solution can solve those challenges, reducing complexity and increasing accuracy and efficiency.

1. Overly-complex approval processes

It’s not uncommon for a company moving to formalize its procurement activities to put in place an overly complex approval process. Too many steps in the requisition and approval processes slows down the processes unnecessarily. Requiring multiple, arguably unnecessary, reviewers for common requisitions overloads and complicates what should be a simple, straightforward task. However, proper approvals are necessary to ensure compliance and work within budgets.

Procurement solutions like Paramount Workplace allow you to establish clear, flexible approval processes that match the way you do business. You may decide to allow everyday items to pass through just one or two levels, and manage the exceptions to the normal process with more detailed rules that allow you to route each requisition line by department, GL account, vendor, item, project, or job. For example, in a multi-line requisition, the software can route each line to the appropriate approver: to IT for computer hardware/software related items; to finance due to the amount or to the controller or CFO because it is over budget.

2. Lack of procurement coordination

When purchasing is decentralized, handled independently by different departments or locations, you end up with data silos that are never fully in synch. Pricing records for identical items from the same supplier may vary. Purchase orders with pricing errors may be rejected, invoices cannot be matched and the resulting phone calls and emails to fix the errors delay and frustrate the process even further.

Automating the procurement process with a solution like Paramount WorkPlace fosters collaboration and communication – both internally and with your suppliers. Price mismatches are eliminated, updated supplier pricing flows into a single location and similar requests can be combined for volume discounts.

3. Time-consuming requisition creation and validation

Building a requisition can be a cumbersome task as the requestor seeks to verify the correct part number, pricing, supplier and account and cost coding for every line.

Procurement solutions like Paramount WorkPlace streamline the process with the use of catalogs and shopping carts that users are familiar with in their everyday lives. As the user builds a shopping cart and checks out, the items are pulled onto a requisition and routed for approval before a PO is created. Default values for attributes like account number or location can be maintained speeding data entry. These Guided Buying Catalogs allow you to enhance the user shopping experience and control costs. Use your own pictures, descriptions and company selected items. Catalogs can be setup by department, location, vendor or type of items and you can control access to individual catalogs by user. You can also establish shopping lists for regularly requested items.

Paramount WorkPlace takes catalogs to a new level of efficiency by offering PunchOut capabilities. The use of PunchOut catalogs speeds order processing and lowers procurement costs through real-time integration with suppliers’ online catalogs.

4. Lack of visibility into the procurement cycle

A lack of visibility into any area of your operations puts you at risk for missed opportunities and even potential fraud. Stalled requisitions can cause major business disruptions. Duplicate requests are costly and inefficient. Manual or informal paper-based procurement practices simply cannot deliver the real-time insight into your operations that a dedicated, purpose-built procurement management solution can.

Procurement solutions like Paramount WorkPlace provide full visibility into every step of the procurement process, from requisition, to sourcing, request for quotes, approvals, PO creation, receipt of goods, through invoice matching, and beyond. Users view customized dashboards that display informative announcements, provide immediate access to catalogs and PunchOut and offer both detailed and summary views of outstanding transactions. Email notifications, sent automatically throughout the process, communicate statuses, and even allow authorized users to approve requests directly from the email.

5. Lack of integration with existing business processes

Procurement is a necessary component of running your business. But you’re in the procurement business. Processes that do not fit in with your business operations quickly get abandoned.

Procurement solutions like Paramount WorkPlace offer tight integration to your organization’s financial systems, and with solutions like Key2Act. For example, you can enter the Job, Service and Cost Code fields for each line during the requisition process. That information accompanies the requisition through its approval process, and is then seamlessly passed to the purchase order upon creation.

The best procurement process is one that is easy to use, secure, efficient and integrated with your business process. The best procurement management solution is one that gets used. Read more about Paramount WorkPlace here.

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