How much visibility do you have into your organization’s procurement processes? If your answer is anything less than “complete,” you’re almost certainly losing money and missing out on strategic opportunities.
In today’s ever-changing economic climate, business agility is critical–businesses must find ways to evolve with the times and adjust to new market conditions, industry shifts, and customer preferences if they hope to stay ahead of the competition.
None of this is possible, however, without transparency and consistency in your procurement processes.
Businesses without clearly defined processes or insights into KPIs like PO lifecycles and supplier performance data can wind up making misinformed decisions that limit opportunities for strategic growth.
Modern procurement practices that leverage automation offer businesses the structure and insight they need to make better decisions and adapt to ongoing, as well as future, changes, and challenges.
Let’s explore the four biggest benefits of procurement automation that lend greater business agility.
1. Reducing Maverick Spending
Maverick spending, often referred to as rogue or dark spending, is the nemesis of procurement professionals everywhere and occurs when employees purchase items without going through the appropriate purchasing, expense, and approval processes.
This happens far more frequently when employees are forced to deal with tedious internal processes, and reports have shown that it can account for up to 80% of a company's total spend.
Most organizations experience issues with maverick spending when no purchasing or approval process exists, or when unenforced processes are circumvented internally. Workflow automation eliminates this entirely by creating a set of standardized and enforced purchasing and approval procedures that fit your unique business needs.
2. Mitigating Risk
Risk is always a challenge in the procurement process. Non-compliance, supplier issues, and even fraud can affect the bottom line of organizations that lack the level of standardization needed in modern times.
One of the many ways automation helps to mitigate these risks is by providing greater visibility into your processes.
Features such as version tracking and activity logs provide procurement teams with enhanced risk prevention capabilities by offering insights into document access.
For example, in the case of suspected fraud related to a supplier contract, the version history of the document can reveal the individuals responsible for making specific changes along with the timeline of those modifications.
Procurement teams can utilize KPI reporting as an additional feature of automation to proactively mitigate risks.
By monitoring activities in real-time, teams can identify anomalies, such as an unusually high number of purchase orders issued to a specific vendor within a month. This allows them to proactively detect and address instances of accidental–or fraudulent–procurement activity.
3. Improving Process Inefficiencies
Relying on manual processes to manage procurement is time-consuming and error-prone.
Take purchase requests and approval procedures, for example. Many businesses continue to use manual forms and workflows for these crucial tasks, which are inherently more time-consuming and more likely to divert employee attention away from more valuable work.
Automation reduces these inefficiencies by eliminating many of the manual steps along the way. As a result, procurement employees gain opportunities for greater strategic involvement, such as running vendor cost analyses or negotiating more favorable payment terms.
These benefits not only offer heightened morale for your procurement teams but also more opportunities to strengthen your bottom line.
4. Shortening Long Cycle Times
Without a system in place to procure goods, specific workflows in the procurement process can take longer than expected. This can have a number of negative consequences for your procurement team, including strained relationships with vendors and end users who may grow impatient.
Research suggests that purchase order automation can help companies process POs 75% faster when compared to businesses that rely on manual activities and workflows, making it a critical tool for improving relationships and cash flows.
In today’s highly competitive and volatile business landscape, business leaders are citing the importance of innovation. In fact, 73% believe it to be a critical factor for business agility. To combat today’s challenges and prepare for those of tomorrow, automation will be a key differentiator for businesses that are able to stay a step ahead of their competition.
Ready to learn more? Check out this 10-minute video to see how web form and workflow automation can eradicate inconsistent and inefficient processes in your procurement processes.