How to Automate Your Procurement Tasks

When you have to rely on outdated technology and systems, purchase requisition can be a bit of a minefield. It might seem as if manual methods like paper forms, spreadsheets, and emails are tried and tested methods of accomplishing your purchase requisition tasks.

But all of these manual systems are also error prone. The problem with these old methods is that they all require intensive human involvement—and people tend to make mistakes. A single error could easily balloon into a long-ranging procurement disaster—one which could set your organisation back for some time.

What you want to do is to minimise the involvement of human hands in doing your procurement tasks. What you need is dedicated software to automate your procurement tasks.

In this article, we will look at the different steps involved in the purchase requisition process, as well as technologies and tools that can help you automate this entire process—which will increase the efficiency of your requisition processes, while minimising the opportunity for human error.

Purchase requisitions as the first step

A purchase requisition is an administrative document used in an organisation to initiate the procurement process. By filling out a purchase requisition document, an employee makes a formal request for specific goods or services to be acquired.

The purchase requisition will also give details about the goods or services requested, including the quantity of the goods and its price. The document will always include the details of the person making the request, as well as the department they represent.

Purchase requests play a fundamental part in the procurement process. This is because purchase requisitions:

• is the initial step that starts the purchasing process
• can be used to keep track of all the purchase orders that is made throughout the company
• ensures that all procurement actions are transparent and well-documented
• can be used to assess the necessity of each purchase request before the money is actually spent
• formalise the whole procurement process and thus prevents fraud
• can be used to keep track of all requisitions related communication
• forms the framework for an audit trail to keep tabs on the whole acquisitions process.

The whole process could benefit considerably from leveraging the power of automation. Good purchase requisition software will guide employees through the process of making purchase requisitions, so that they will be able to plan ahead for which goods and services they might need. In this way an organisation will minimise unnecessary spending while getting the most benefits from its procurements. It will also eliminate indirect spend.

Because this entire system is automated, the whole process of keeping purchasing records up to date is handled by the software. Which means that employees don't have to spend time and effort hunting down the right paperwork and keeping track of purchase related emails.

How purchase requisition works

Even though different organisations have different ways of handling their internal affairs, there are a couple of key steps that form the basis of any purchase requisition workflow.

The basic outline of the process revolves around three key steps—and the three key stakeholders that have to drive each one of these steps.

The purchase requisition process is kicked off by the Requester, which is the one who submits the purchase request.

When someone with the appropriate authority notices a need in your organisation, they can make a formal request for specific goods or services by completing a purchase requisition form. It is their duty to fill in the form accurately and then submit the form into the computer for processing.

This form will then be processed by the Purchasing Agent, which takes charge of the next step in the process: the screening of requests.

When the form is submitted into the computer, the Purchasing Agent is notified. It is then their duty to verify the information on the form, to make sure that all the appropriate information is provided. If it isn't, they could either attempt to complete the information themselves, or failing to do so, return to the requester with a note.

Once the form is complete and verified, it is forwarded to the next step for final approval and the eventually issuing of the purchase order.

The final step is handled by either the manager of the Requester or someone from the Finance Team.

In many organisations, each department is given a set budget for purchase requests. When a purchase request is submitted, it falls on a manager in their department to check the request against the available budget and the spending limit of the requester.

If the manager approves the request, it will be forwarded to the financial department, which will then issue the purchase order. If the manager rejects the request, it has to be sent back to the Requester with feedback on why the request failed.

All of these steps can benefit greatly from automation. It shouldn't be necessary to fill in manual forms and send it through your departments, or for managers and officers to chase each other down with emails.

When this process is administered by a centralised system, the software will keep track of all the steps involved in the process, issue alerts when the process stalls, and ensure that everyone gets the appropriate feedback along the way to ensure that the process is handled as efficiently and effectively as possible.

Vendor management tools

There are several benefits to adopting a vendor management tool to put an effective strategy in place to handle vendor relations.

These benefits include the ability to do a complete overall of your current vendor relationships strategy, streamline the process that you've already built up, or even if you want to build up your strategy from the ground up. The right software will help you get up to speed in record time, and ensure that everything works efficiently from the get go.

You want to have effective relationships with your vendors—relationships built on a collaborative spirit and effective communication. Here, software can do wonders to bring all the stakeholders in your vendor relationships together.

The goal is to strike the right balance between getting the right people involved, following the most efficient processes, using the right technology and tools.

One important part of the vendor relationship interaction that  can benefit from automation, is the procurement process.

But vendor management software will also allow you streamline your vendor onboarding process, managing their performance once they form part of your organisation, as well as the task of off-boarding vendors when necessary.

You want a vendor management strategy that works consistently and smoothly, no matter the circumstance or particulars of the vendor interaction.

These software tools will collect and analyse data on your vendors on a consistent basis. This data is then used to give you insight into the vendor performance. Which makes it a lot simpler to track their operational performance, to manage expenses, and also to ensure that they comply with the stipulations of their contract.

Using VMS to automate your vendor relationships

Good visibility into the performance and compliance of your vendors is key to effective vendor management. The right software tools will allow you to automate these processes, putting the tools in your hand to manage your vendors effectively while saving you time and money in the process.  

Here are only a few of the key benefits of using a Vendor Management System (VMS) to automate your vendor relationships:

• Better vendor screening. The software will make data on each vendor available to you, which will allow you to make informed decisions when selecting vendors. This data includes business reports, credit reports, and financials.
• Better vendor collaboration. The software will keep everyone on the same page in real-time. For example, it will automatically issue goods receipt or return ship notices.
• Better data gathering. The system will keep track of all the necessary paperwork to make the purchase acquisition and other vendor interactions work. Which means that a manager will be able to access all confidential vendor information and payment details, contracts, as well as purchase orders and purchase requests from a single interface.
• Better vendor onboarding. The system will guide you through the process of gathering the appropriate information on each vendor. It will then help you to screen each vendor based on their business reputation, their performance track record, and other factors.
• Better performance tracking. The system will be able to identify and flag vendors that do not meet their performance targets.  The software can then issue the appropriate notifications and initiate corrective action plans. When necessary, the system will also be able to off-board vendors when necessary.
• Manage contract pricing. When catalogue prices are adjusted, the system will ensure that everyone pays the appropriate amount for all the goods and services rendered. Which means the system will automatically enforce the correct pricing and ensure that all contractual obligations are met.
  

Features of a good procurement suite

When we specifically look at the benefits of using dedicated procurement management software, there are a couple of tasks that will instantly become easier to manage and more streamlined.

Here are some of the procurement processes that will benefit from using the right software tools:

• Purchase requisitions. The software will guide you through the whole purchase requisition process. That will include capturing the form, the approval process. The system will also help you keep track of all the purchase requests that have been made to ensure that all departments stick within the limits of their budgets and other constraints. It will also verify that all the appropriate managers and stakeholders were consulted in the approval process.
• Purchase orders. The system can automate the whole process of issuing purchase orders. When purchase requests are approved by the appropriate personnel, the system will automatically generate the correct purchase orders and send it out to the right vendors. Once these orders have been issued, the system will keep track of the status of each order and to ensure that everything is completed on time and up to spec.
• Vendor management. The system will also handle some of the more time consuming—but crucial—processes involved in effective vendor management. These include the onboarding of vendors, maintaining the vendor relationships, and also the overall management of all vendor interactions. All the while, the system will generate automating ratings for each vendor and streamline the process of choosing the right vendors for each need.
• Purchase invoices. The system can streamline the three-way matching process to ensure that invoices are approved in an efficient and accurate manner. Which means that the administrative lag on your business operations are reduced considerably.
• Procurement data analysis. All of the information that flows through the system is analysed to generate actionable data. With this type of insight into your purchase data and history, you will be able to adjust your vendor relationships and management strategy to get the most bang for each buck you spend on each vendor, and save a lot of time in the process.
  

Conclusion

With the right vendor management tools, most companies will be able to implement a robust, automated vendor management program in a month or less.

It is especially beneficial to automate your procurement tasks. An automated system can help you keep tabs on all your purchase acquisition activities and ensure that the relevant managers review every request before approval.

The software will track all communications related to the management approval chain. It will also keep tabs on the different categories of acquisition request and ensure that the relevant authorities in your financial department signed off on every request.

The software can also manage purchase requests in other ways. For example, if there is a repeated purchase request, the request type can be flagged and handed over to the appropriate managers for review so that either a regular purchase order is instated, or the situation is investigated in some other way.

The system will also keep a close watch on the budget limitations for each department with regards to purchase orders, and automatically block requests that exceed these budgetary limitations. The system will also be able to set and enforce approval thresholds.