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.
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- Set Clear Metrics for the Development Project
Set achievable metrics based on quantity or spend. Define the project schedule as one metric.
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- 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.
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- 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.
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- Ensure the Right Partner
By choosing a knowledgeable partner, you ensure that you get the necessary support and expertise to move the project forward.
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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.
Ensuring a sustainable supply chain is standard and the default today, for the entire procurement. As the transparency of the procurement process increases, we can also ensure that purchasing lies on sustainable foundations.
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.
When planning supplier activation, it is worth using existing best practices with the help of a message broker. At Pagero, we have ready-made models and practices that effectively deliver results. Success is also measured together with the customer.
Below are the biggest benefits of automating the purchasing process
- Purchasing in accordance with the contract
- Better control of spend
- Guide the user to act correctly
- Automating order traffic
Less bypass purchasing, full utilization of quantity discounts, cost tracking. Purchase transactions are registered for the order, allowing tracking of spend accumulation by contract.
Visibility into total costs ensures that all necessary information for development and minimizing risks is available.
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.
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.
