If you struggled with your procurement management process before, your fight ends here.
In this post, we outline 5 key steps that will help you to establish a good framework for properly managing your procurement activities in 2022.
In addition, you’ll also find out why you need to ditch legacy management procurement practices for automated procurement management systems.
So, without further ado, let’s get right into it.
5 Fundamental Steps for Effective Procurement Management in 2022
Step 1: Establish a procurement management strategy
Not a single purchase requisition and purchase order should be approved and issued to vendors without a procurement management strategy in place.
Taking time to deliberate a procurement plan helps you to define your budget and identify the goods and services you will and will not pay for in 2022.
A management procurement plan maintains order and gives structure on how procurement operations will be handled throughout the course of the year.
Step 2: Create a directory of preferred vendors
You don’t have to wait until you need to acquire goods or services to start screening potential vendors.
A directory of vendors must be readily available at all times, so that at any time during the year if one supplier fails at the last moment, a new one can be found within minutes.
How do you qualify the suppliers who will be in your directory? You can select them based on a set of criteria such as delivery times, price of their goods/services, quality control, service, environmental responsibility, and support.
Step 3: Invite pre-qualified vendors to e-auction and manage your contracts
When you’re ready to start purchasing goods and or services, all you now have to do is invite your pre-qualified vendors to a reverse auction. Thanks to digital procurement process solutions all auctions can now be done online.
Once you’ve narrowed down your top vendor choices, negotiations can begin. Remember to be clear with suppliers about payment terms and conditions, delivery timelines, and other important issues.
When both sides are happy with the details you’ve hammered out, contracts can be signed.
Step 4: Adopt appropriate vendor management best practices
Succeeding with management procurement in 2022 has a lot to do with the vendor management practices you follow.
· Do you have regular meetings for accountability with your suppliers?
· Are you talking openly about expectations and milestones?
· Is your accounts payable department releasing payment on time?
· What are the quality control measures you have put in place to facilitate a smooth procurement process?
You must understand that there is no one-size-fits-all management procurement approach. You have to tailor the steps mentioned here to suit your unique situation.
Step 5: Measure, track, and analyze procurement data
In order to gauge how well your procurement management efforts are doing, you’ll need to make certain that you’re measuring, tracking, and analyzing your procurement process activities.
Select the key performance indicators (KPIs) you’re going to use as your point of reference. These KPIs will assist you in pinpointing areas that are doing well and those in need of improvement.
The Case for Digital Procurement Management
Failure to make the switch from legacy management procurement systems to digital solutions is a sure-fire way to let your competition beat you.
Continuing to rely on manual paper-based procurement management can damage your reputation. You’ll be viewed as a non-compliant and non-environmentally-friendly business.
Furthermore, manual processes are crippled by costly processing, slow-moving approval cycles, and unbridled costs. This has downstream consequences that include chaos, poor supplier management, and late vendor payments. Inevitably, your vendor relationships will suffer.
What does automation provide?
Digital procurement management means greater efficiency, improved bottom lines, and mitigated spending.
- Increased efficiency: When using technology, procurement teams have greater visibility of all documentation and direct access to communication with vendors. Therefore, approval times are shorter and faster; and records are more accurate and easily retrievable.
- Data analytics: A digital management procurement solution makes it possible to mine your own internal data which you can then use to extract actionable insights. Clean data paves the way for data-driven purchasing decisions to be made which can have a positive impact on the enterprise’s bottom line.
- Better transparency: Fraud is rampant in many organizations still reliant on legacy procurement management. Digital procurement improves transparency across every step of the procurement process – be it pricing, or vendor communication, right up to vendor payment. Transparency is definitely one of the key methods to also reducing risks along your supply chain.
- Time-efficient: Reports show us that procurement teams relying on manual procurement management processes spend considerably more time on simple things like invoices – up to 3 weeks versus 5 days for teams using automated procurement solutions.
- Strategic procurement: As a core business function, procurement must be aligned with the company’s priorities and overall vision. Automation makes it possible to measure and compare procurement metrics against other business KPIs.
Digitization The Easy Way
When it comes to trusted procurement automation systems, ProcurePort should be among your top options. Procurement solutions from ProcurePort make automation of repetitive transactional processes encountered in the P2P cycle easier to handle.
ProcurePort provides reverse auction software, purchase requisition software, contract management solutions, procure-to-pay software, and spend analysis technologies.
All this software comes with pre-built templates that can be customized in the clean, easy-to-use drag-and-drop user interface. Ideal for small, medium, and large enterprises.
Wrap Up
In order to thrive in 2022, your procurement management process must be strategic and automated.
It’s time to do away with old, inefficient management procurement techniques, and embrace high-impact digital solutions.
If you’re looking for reliable, robust, and innovative procurement process solutions look no further than ProcurePort. Our software is the go-to for enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.
To discuss procurement software with a consultant or to schedule a demo of our solutions, contact us today.