Suc­ceed­ing in Pur­chase Process Automation

Devel­op­ing the pur­chase process is often seen as a chal­leng­ing, per­haps nec­es­sary evil in com­pa­nies, which is under­tak­en because some­one says so. But what if pro­cure­ment devel­op­ment projects were approached by holis­ti­cal­ly con­sid­er­ing the ben­e­fits of the project and how, by automat­ing the pur­chase process, busi­ness part­ner col­lab­o­ra­tion can be improved, while simul­ta­ne­ous­ly stream­lin­ing inter­nal process­es and increas­ing transparency? 

In this blog, Jen­ni Lon­ka from Islet Group and Min­na Myl­ly­lu­o­ma from Pagero dis­cuss what needs to be tak­en into account in a pur­chase process automa­tion devel­op­ment project and what kind of ben­e­fits can be achieved through automation.

Five Effec­tive Ways to Get Started 

The begin­ning is usu­al­ly always the most chal­leng­ing. The idea and need for pur­chase process automa­tion are rec­og­nized and it may already be includ­ed as part of the com­pa­ny’s future devel­op­ment plan. But where to start, what to con­sid­er first, and how to pro­ceed in the ini­tial phase?

Below are some of the most impor­tant tasks to get start­ed with pur­chase process automa­tion. Of course, depend­ing on the orga­ni­za­tion and busi­ness, the list may look dif­fer­ent, but at a gen­er­al lev­el the five most impor­tant con­sid­er­a­tions are highlighted.

Define the Cur­rent Process and Iden­ti­fy Bottlenecks

How does the cur­rent process sup­port the automa­tion project and are there any areas that need to be changed as part of this devel­op­ment project? Does the orga­ni­za­tion have the nec­es­sary tools for com­pli­ant oper­a­tion; pur­chase process, stake­hold­er col­lab­o­ra­tion, and monitoring.

• • • Set Clear Met­rics for the Devel­op­ment Project

  Set achiev­able met­rics based on quan­ti­ty or spend. Define the project sched­ule as one metric.

  • • Com­mit and Ensure Ownership

  The project must have own­er­ship that guides the change pro­gram, but it is extreme­ly impor­tant to com­mit the right peo­ple from the busi­ness side. At the same time, ensur­ing that they have the nec­es­sary sup­port orga­ni­za­tion avail­able. Com­mu­ni­cate what, how, and why from the top man­age­ment lev­el to the entire organization.

  • • Define Prac­ti­cal Tasks to the Nec­es­sary Level

  The most impor­tant tasks and their active mon­i­tor­ing at a prac­ti­cal lev­el. One way is to focus on the oper­a­tional mod­els and sup­pli­ers of one pro­cure­ment area.

  • • Ensure the Right Partner

  By choos­ing a knowl­edge­able part­ner, you ensure that you get the nec­es­sary sup­port and exper­tise to move the project forward.

• First Step is to Dig­i­tal­ize Pro­cure­ment Documents 

  Improv­ing pro­cure­ment and espe­cial­ly the pur­chas­ing process is the sum of many things, but with just a few clear actions, you ensure imme­di­ate ben­e­fits, elim­i­nate man­u­al stages, and save resources. And per­haps even more impor­tant­ly — infor­ma­tion moves cor­rect­ly through­out the entire chain, from the buy­er to the sup­pli­er, ensur­ing that we always use the lat­est information.

  Auto­mate Mes­sage Traf­fic and Processes 

  Dig­i­tal and auto­mat­ed mes­sage traf­fic facil­i­tates trade between com­pa­nies. Using elec­tron­ic doc­u­ments elim­i­nates man­u­al work and clar­i­fies and speeds up the over­all process through­put time, enabling smoother trade. With dig­i­tal mes­sag­ing, com­pa­nies have access to high-qual­i­ty and accu­rate data, which can eas­i­ly be uti­lized in the devel­op­ment of the com­pa­ny’s pur­chas­ing process.

  Dig­i­tal­iz­ing process­es brings many ben­e­fits both for the inter­nal pro­cure­ment process­es of the orga­ni­za­tion and for the col­lab­o­ra­tion between stake­hold­ers. Through dig­i­tal­iza­tion, the lev­el of automa­tion is raised through­out the pro­cure­ment to pay­ment chain, and it also ensures the cor­rect­ness of the infor­ma­tion as well as easy work­ing meth­ods for the entire pur­chas­ing organization.

  Ful­ly Uti­liz­ing the Pro­cure­ment System 

  The right pro­cure­ment-sup­port­ing solu­tion can ensure the imple­men­ta­tion of a new oper­at­ing mod­el and achieve ben­e­fits from day one.

  Sup­pli­er con­tracts result­ing from com­pet­i­tive ten­der­ing are put into use for oper­a­tional pur­chas­ing, where­by all the cor­rect agreed terms, prices, and prod­ucts are avail­able to the buy­er. The user does not need to retrieve the con­tract sep­a­rate­ly, as the infor­ma­tion is read­i­ly avail­able. The guid­ed pur­chas­ing tool takes the end user to the right ser­vices and prod­ucts they need, mak­ing pro­cure­ment easy and car­ried out in accor­dance with agreed practices.

  Ensur­ing sus­tain­able oper­a­tion is an impor­tant cri­te­ri­on along with qual­i­ty, rule-com­pli­ant, and auto­mat­ed oper­a­tion. A sus­tain­able oper­at­ing mod­el is not an obsta­cle to automa­tion and effi­cien­cy, but can fur­ther reduce costs while pay­ing atten­tion to envi­ron­men­tal, social, and eco­nom­ic sus­tain­abil­i­ty. Shar­ing infor­ma­tion and train­ing, con­sid­er­ing both inter­nal and exter­nal stake­hold­ers, is impor­tant in this con­text as well. At the same time, the orga­ni­za­tion’s under­stand­ing of glob­al sup­ply chains increas­es and the con­ti­nu­ity of oper­a­tions is ensured even in uncer­tain times, also sup­port­ed by digitalization.

Col­lab­o­ra­tion Between Stakeholders 

No process is func­tion­al if all par­ties are not involved. It is vital for the buy­er to involve the sup­pli­er in the oper­at­ing mod­el from the out­set and ensure that the dif­fer­ent needs of the sup­pli­er are tak­en into account. This is equal­ly impor­tant from the sup­pli­er’s perspective.

In today’s pur­chas­ing and pro­cure­ment orga­ni­za­tion, of course also the capa­bil­i­ties and con­trol over tasks of each per­son are impor­tant. This also sup­ports the very impor­tant col­lab­o­ra­tion with oth­er orga­ni­za­tions, both in terms of inter­nal and exter­nal stakeholders.

By uti­liz­ing arti­fi­cial intel­li­gence and var­i­ous oppor­tu­ni­ties brought about by automa­tion, added val­ue is pro­vid­ed to the above-men­tioned aspects, among oth­er things, by elim­i­nat­ing man­u­al actions and free­ing up time for more impor­tant tasks. And of course, sus­tain­able prac­tices and pro­cure­ment are at the cen­ter and change the way of oper­at­ing for the entire business.

Sup­pli­er acti­va­tion plays a sig­nif­i­cant role in pur­chase process automa­tion, and it should be done in col­lab­o­ra­tion with sev­er­al depart­ments in the com­pa­ny. With­out effec­tive col­lab­o­ra­tion, the desired ben­e­fits will not be achieved.

Impor­tant con­sid­er­a­tions in imple­ment­ing sup­pli­er acti­va­tion include

• Acti­vate the largest order sup­pli­ers first, through which the high­est lev­el of automa­tion and eco­nom­ic ben­e­fits are achieved.
• Seg­ment and plan sup­pli­er col­lab­o­ra­tion to suit each sup­pli­er segment.
• Sup­pli­er acti­va­tion can be a heavy and time-con­sum­ing process, espe­cial­ly when it comes to a multi­na­tion­al orga­ni­za­tion. How­ev­er, invest­ing in this is par­tic­u­lar­ly worthwhile.

Below are the biggest ben­e­fits of automat­ing the pur­chas­ing process

• Pur­chas­ing in accor­dance with the contract

Less bypass pur­chas­ing, full uti­liza­tion of quan­ti­ty dis­counts, cost track­ing. Pur­chase trans­ac­tions are reg­is­tered for the order, allow­ing track­ing of spend accu­mu­la­tion by contract.

• Bet­ter con­trol of spend

Vis­i­bil­i­ty into total costs ensures that all nec­es­sary infor­ma­tion for devel­op­ment and min­i­miz­ing risks is available.

• Guide the user to act correctly

Guid­ed pur­chas­ing por­tal guides the buy­er and enables oper­a­tion in accor­dance with the con­tract. This saves time, reduces errors, and enables pur­chas­ing accord­ing to pur­chas­ing instruc­tions and contracts.

• Automat­ing order traffic

Right infor­ma­tion moves smooth­ly to the right place and helps auto­mate the entire chain from order to invoice processing.

It goes with­out say­ing that automat­ing the pur­chas­ing process brings tremen­dous ben­e­fits. We can­not promise a com­plete­ly sim­ple and straight­for­ward jour­ney. How­ev­er, we can guar­an­tee that after care­ful plan­ning, com­bin­ing the right resources, and imple­ment­ing func­tion­al sys­tems, your com­pa­ny’s pur­chas­ing process will make trad­ing, pro­cure­ment trans­paren­cy, and deci­sion-mak­ing easier.