Procurement technology comes in many different shapes and forms. However, the main goal of most procurement technology is to create efficiency throughout the entire lifecycle of a procurement activity or contract. This is a rather lofty goal, as procurement departments are heavily involved in almost every aspect of an organization. Procurement, as an overarching department, is involved with contract management, supplier relationships, sourcing in supply chain and supply chain management, and internal organizational operations. All of this together makes procurement one of the most crucial components of an organization, no matter how small or large. Implementing a procure-to-pay system is a viable option in today’s modern, fast-paced, and hyper-competitive international economy.
A procure-to-pay system connects the entire lifecycle of procurement from one phase to the next, beginning with identifying goods and services required, and ending with accounting and inventory. A procure-to-pay system facilitates greater organizational efficiency through internal communication, by linking the phases involved in procurement together.
Where It Starts
Procure-to-pay systems start with the identification of needs or services by the organization. Oftentimes, these are submitted in the form of a purchase requisition. However, in other instances, it’s up to the procurement professionals to be aware of upcoming expiration dates on existing contracts or regularly cycled purchase orders. Regardless, the procure-to-pay process starts here: with the identification of needed goods or services.
From here, the procure-to-pay system stems a purchase order, which can often begin with a request for proposals. This is a process in which the organization reaches out to a list of preferred suppliers and vendors with a request for an initial bid/proposal on the contract for goods or services required. This commonly leads to a reverse auction, and then the contract is awarded to the most competitive bidder.
This begins the next phase of the procure-to-pay process – the actual receipt of goods or services procured. After the goods or services are accounted for, a procure-to-pay system provides e-invoicing services, allowing for invoice matching, and simple payment processing for the accounting team, to approve and deliver payment.
Benefits of Procure-To-Pay
With such a sophisticated system linking the various phases of the procurement lifecycle together, organizations that employ a procure-to-pay system see a variety of significant benefits. First and foremost, the most obvious benefit that results from implementing a procure-to-pay system is the streamlined procurement processes. By bridging the procurement stages together, the procure-to-pay process creates internal efficiencies within your organization, which in turn, leads to higher levels of productivity, and higher cost-savings as well.
Speaking of cost savings, another impactful benefit that procure-to-pay systems offer is a significant reduction in the costs of running and processing invoices. Through procure-to-pay software, the e-invoicing process is simple, cost-effective, and efficient. Bringing the cost of invoice processing down is an essential asset in a more digital economy, like today’s one. High volume contracts and a high volume procurement department result in an incredibly high volume of invoices, a significant cut in the cost of invoice processing will lead to huge savings in the long run.
Not only will a procure-to-pay system save you money, and save your employee’s time, but it will also give both you and your vendors a higher level of transparency and visibility throughout the entirety of the supply chain, and allows for both parties to view the status of invoices. This transparency extends even further than that, however. Management also gets a higher level of visibility into the procurement process and can better assess, evaluate, and approve or deny exceptions to the normal procurement purchases and lifecycles.
How The Supplier Relationships Benefit
As a procurement professional, there’s almost no relationship that’s more important than the supplier relationship. A strong relationship with the right vendor can prove to be one of the more valuable assets that an organization can hold and maintain. Procure-to-pay systems offer robust supplier features to help your procurement professionals create and maintain vendor relationships at a higher, and more successful level. This, in turn, could incentivize the vendors to offer higher discounts, better deals, or longer-term contracts that benefit both parties, while guaranteeing the delivery of the agreed-upon revenue.
Building long-lasting relationships with high-quality vendors and suppliers also build windows of opportunity to offer one another goodwill, and to have one another’s backs, so to speak. However, these long-lasting relationships will also be good for your organization’s reputation and bring a higher level of competition to future contracts.
Finally, a procure-to-pay system has an exceptional data-collection ability. In other words, by implementing a procure-to-pay system in your organization, your staff will have better access to stronger data, which in turn leads to better, data-driven decision making and strategic spend management.
Procurement is nothing like it used to be. However, it’s just as important as it’s always been, the landscape is just changing slightly. Using procurement tech is no longer a fad, but considered a widely recognized industry standard that elevates the procurement process to a completely new level. The benefits of implementing procure-to-pay software speak for themselves; from increased efficiency and streamlined operations to better cost-savings, and stronger supplier relationships, procure-to-pay software advances the procurement effort as a whole.
For more information on the benefits of procure-to-pay software, or anything else related to the procurement life cycle, keep browsing ProcurePort. ProcurePort is the internet’s premier place for everything procurement, from knowledge and information to software and technology, and everything in between.