What is procurement management?
Procurement is vital for keeping businesses operational. Procurement management is the strategic administration of a company’s spending, which includes vetting suppliers that meet company standards related to quality, timeframe, and budget.
This business function ensures best practices are followed so that sourcing and purchasing inefficiencies — like reviewing suppliers, digitally transforming manual or paper-based processes, or slow approval cycles — are addressed and resolved.
Example of an effective procurement management process
Precision, predictability, cost-effectiveness, and efficiency are the driving principles of an effective procurement management process. This includes in-depth knowledge of needs and requirements across all business units, an understanding of suppliers and performance, and any market changes which may put supply chains at risk.
Why effective procurement management is important
Effective procurement management helps companies:
- Control spending. Solve procurement bypass by creating a standardized process for all purchase requests to prevent invisible spending.
- Improve process efficiency. With insight into key procurement data, easily identify opportunities to improve procurement workflows, negotiate on goods and services, and improve cost savings and profitability.
- Develop better supplier relationships. Unlock hidden value by turning transactional relationships with suppliers into strategic business partnerships with a centralized supplier management database.
- Strengthen supply assurance. This was a top priority for chief procurement officers, according to a Deloitte survey on top CPO priorities.
Tips to digitally transform your procurement process
Business profitability hinges on how well your procurement process is optimized. If the process is unstructured or if it has any gaps, it’s likely that critical updates, tasks, or deadlines will fall between the cracks, leading to short-term delays or costly long-term issues. But these gaps and additional key challenges that affect procurement management — such as communication, data management, and supplier management — can be easily solved with the right technology.
Low-code software’s visual user interface makes it for business users to build, update, and connect processes without any knowledge of coding or adding to the IT backlog. With an end-to-end view of your procurement and purchasing processes, easily identify areas of improvement, eliminate procurement bypass, and automate any manual, paper-based tasks and workflows.
Here are some tips for leveraging a low-code automation solution at every step of the procurement process for optimized workflows.
1. Analyze needs identification data
Get accurate information every time with accurate data pulled directly from your procurement and purchasing process. With easily customizable dashboards and reports, you can quickly identify needs and save costs and time by tracking and consolidating similar requirements across multiple departments.
2. Streamline purchase requisition and requisition review
Streamline purchase requisitions with forms that automatically turn requests into process workflows. With a customized form builder, you can easily centralize and review purchase requests without any additional rework or chasing after missing information or details.
Plus, provide requesters with visibility into their requests and empower them to keep track of their requests with a solution like Pipefy’s request tracker. This means less time following up for the procurement team and a better user experience for the requester.
3. Automate when and where possible to eliminate manual work
While some steps may lend themselves to automation better than others, automating manual tasks throughout your procurement process is a great way to improve end-to-end accuracy and efficiency.
Low-code automation software also brings visibility to tasks or responsibilities that are often disrupted or bogged down by manual processing and upkeep, all the while improving accuracy and responsiveness between companies and suppliers. In addition to facilitating a more efficient purchasing process, low-code automation also creates a layer of process orchestration to keep operations running smoothly.
With conditionals and automation, automatically trigger activities and required actions (like moving requests to the next phase in the process) and required actions (like approvals, vendor/ technical proposal evaluation, NDAs, and contract signatures) to keep communication flowing smoothly and errors and time-consuming manual work.
By standardizing purchase requests and approvals, eliminate scattered information across email threads, files, and systems.
Low-code Automation: Good for Business, Great for ITDownload the report
4. Improve supplier solicitation with quality controls
Improve quality and reduce time waste with quality controls. Quality controls ensure that companies are sourcing and receiving the best quality available. With a standardized quality management workflow that’s built into your procurement process, companies can reduce the waste of resources, time, and money. Here’s how:
- Create a list of standards or requirements that need to be met in order for a supplier to be considered. This can include details and specifications like dimensions, industry standards, quality, or performance. For companies seeking specialized goods or services, fulfilling business strategies, like sustainability or ESG initiatives, or meeting time-sensitive deadlines, this step is key in strategic sourcing.
- Automate this step by creating a standardized prequalification document or smart form with conditionals — like information requirements — that can be easily shared with suppliers to streamline the data intake process. Once your prequalification form is received and automatically routed into the procurement process, immediately flag suppliers that fail to meet quality controls and review those that qualify for approval.
5. Auto-generate purchase orders
Standardize and streamline the purchasing process by auto-generating a purchase order with data pulled from the approved purchase requisition form, and automatically deploy the PO once the purchase request is approved.
With the added capability to integrate your existing software, you can create a seamless process experience that maximizes your procurement system without adding chaos or additional time-consuming rework, like purchase order submissions.
Make information and data flow automatically from one system into the other (like data from proposals to ERP systems like SAP or NetSuite) to generate the purchase order and centralize all the procurement’s teamwork and interactions with stakeholders.
Solve procurement management challenges with Pipefy
Procurement teams have to process purchase requests in a fast and productive way to meet companies’ needs for goods and services, although they struggle going back and forth among systems, emails, and tools.
A low-code solution makes it easy for teams to design and build workflows and automations without writing a single line of code — a win-win for both procurement teams in need of immediate solutions without adding to the IT backlog.
Without high implementation and license costs, low-code automation solutions are cost-efficient and offer fast deployment by empowering approvers and process owners to customize workflows themselves with an IT-sanctioned tool.
Pipefy is a low-code process automation solution that acts as a visibility and communication layer that connects disparate systems and activities to streamline the purchasing process. Deliver more value and improve business performance with Pipefy.