No longer confined to paper trails and manual processes, modern procurement operations rely on e-procurement software. Thus, according to the recent Deloitte Annual CPO Survey, driving operational efficiency and going digital were the top priorities in 2023. And they are here to stay. As businesses increasingly rely on technology, the market for e-procurement software is witnessing growth and innovation.
But with numerous options available, how do you choose the right one for your business?
In this article, we'll break down the essentials to help you pick the right e-procurement software without getting overwhelmed.
Understanding the Importance of E-Procurement Software
According to McKinsey, digital procurement reshapes organizational structure and improves business agility. Using advanced digital tools lays the groundwork for creating "sophisticated, cross-functional processes".
McKinsey outlines three elements for the "procurement operation model of the future", which are:
- Strategic buying
- Fully autonomous procure-to-pay operations
- An agile pool of specialists with digital competence
While the company mostly refers to AI and machine learning, transitioning from traditional methods to e-procurement marks the initial step towards sustainable value in procurement.
Adopting e-procurement software goes beyond mere process automation; it is a strategic initiative to drive cost savings and mitigate risks. By centralizing activities, companies get proper data analytics and enhance collaboration both internally and externally.
Strategic Aspect of Adopting eProcurement Software
Before embarking on the journey of selecting e-procurement software, you need to outline your strategic objectives first.
Recognize Critical Pain Points
Whether it's maverick spending or compliance issues, list key operational bottlenecks to establish priorities for improvement. Such introspection helps set clear goals for software implementation and focus your efforts on addressing the root cases.
Involve Key Stakeholders
Procurement is a cross-functional endeavor that involves procurement professionals, finance teams, and more.
Engaging key stakeholders from the outset fosters buy-in, promotes collaboration, and ensures alignment. It eventually ensures that the chosen eProcurement solution meets the diverse needs of the entire organization.
Allocate Budgets and Resources
Selecting the right e-procurement software is not just a technological decision - it's also a financial one.
Before diving into the market landscape, conduct a cost-benefit analysis. Establish a clear budget, considering not only the initial investment but also long-term ROI.
Comprehensive E-Procurement Software: Key Features to Look For
There is a multitude of systems on the market, offering various features, industry-specific tools, and solutions suited to a specific type of business.
However, when considering automation, a good eProcurement software should provide a suite of core functionalities to streamline the entire procurement process in your organization.
E-Ordering
A fundamental aspect of any eProcurement is its ability to simplify the purchasing process. Users need to effortlessly create purchase requests, submit them for approval, and swiftly turn requests into purchase orders through automation.
According to SOC 2 audit requirements, people in an organization requesting items are different from people placing the POs. Therefore, pay attention to systems providing a request management module to separate these duties effectively.
To manage purchase requests easily, keep an eye on features like:
- Customizable requisition forms
- Ability to prioritize requests based on company needs and urgency
- Easy modifications
- Ability to import products/services for seamless access when creating requests
To buy items on time, make sure that procurement professionals will easily:
- Generate purchase orders from requests in a few button clicks
- Add custom fields to PO forms
- Match POs with receipts and invoices (3-way matching)
- Monitor delivery dates and waybills from the moment they place a PO
Approval Workflows
Approvals are vital to control how purchases are made in your company. Automated workflows ensure all requests, orders or RFQs undergo consistent authorization procedures.
To streamline the buying process and save time, look for things like:
- Custom, reusable approval templates
- Intuitive editor (e.g. drag-and-drop functionality)
- Options for serial and parallel approvals
- Ability to set up approvals based on user groups, projects, and other criteria
Supplier Management
Effective vendor management is one of the key aspects of a productive supply chain. Hence, a good eProcurement system should organize your entire supplier network in one place and foster strong relationships with the most credible vendors.
Before committing to a solution, check if it provides:
- Simplified supplier onboarding
- Detailed profiles containing contact details, activity areas, and more
- Ability to organize suppliers based on service/product areas
- Vendor performance metrics and scorecards
- A supplier portal
Budgeting Capabilities
A resilient purchasing strategy relies on precise budgeting processes. With a proper software system, you gain control of your finances and manage company-wide spending precisely.
Look for e-procurement software that offers:
- Ability to allocate budgets by projects and departments
- Ability to lock spending when budgets hit maximum limits
- Currency distribution
- Real-time visibility into budgets versus actuals
- Filtering budgets by status, total spend, remaining amounts, etc.
- Alerts for budget overruns or nearing limits
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E-Sourcing Capabilities
In essence, e-sourcing tools enable procurement managers to conduct e-actions and secure the best deals. You can forget about manual bid processing or endless emails back & forth. It eventually leads to improved supplier relationship management and maximizes savings through strategic acquisitions.
For maximum benefit from your strategic sourcing initiatives, look for a platform that includes:
- Ability to create meticulous Requests for Quotation (RFQs)
- Various types of auctions (reverse, sealed, British, etc.)
- Ability to schedule e-auctions to avoid last-minute rushes
- Notifications of bid responses
- Bid evaluation matrix
- Contract management features
- Ability to convert RFQs to purchase orders
Warehouse & Inventory
Construction, manufacturing, or similar companies require an additional module for inventory management. It provides centralized control over product levels on a single platform, instead of juggling tools for inventory and procurement management separately.
If this is your case, verify the software has the following features:
- Product management
- Tracking products across multiple warehouses
- Ability to track waybills and verify product deliveries
- Alerts on critical amounts for timely restocking
- Product transfer requests
- Barcode scanning
Spend Analytics & Reports
Spend analysis becomes easier with digital transformation. Online procurement solutions provide reporting capabilities, allowing you to maintain transparent records of all acquisitions and track spending patterns.
The bare minimum of your future system should include:
- Real-time data charts on PO volumes
- Historical reports with financial amounts & trends
- Spend analysis across vendors
- Distribution reports on currencies, projects, payment methods, and more
Notifications
Whether your team is of 2 or 200 members, it's crucial to keep everyone in the loop and aligned. Timely notifications play a huge role in cooperation among the purchasing team, project stakeholders, and suppliers.
Look for e-procurement software that enables:
- Customize instant and email notifications
- Communicate with the team through an instant chat
- Set alerts for critical minimum or maximum thresholds (e.g. for inventory, budgets, etc)
- Set reminders (e.g, for contract expiration dates)
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Key Considerations When Choosing E-Procurement Software
In addition to key functionalities, you should pay attention to usability, integrations, customization, and other factors influencing the overall effectiveness of the system.
Ease of Use
First and foremost, a good eProcurement system has to be easy to use. If your procurement team becomes frustrated by complexities, they'll just get back to the original, less efficient methods.
A good system is intuitive, with clear navigation and minimal training requirements. It streamlines tasks, reduces errors, and enhances productivity for all users - from requisitioners to approvers to administrators.
Integration Capabilities
Data integrity is a top priority for continuous processes. That's why the procurement system has to be able to integrate with the toolset you already use.
Make sure it integrates with key accounting tools (like Sage or Quickbooks), ERP systems (like SAP), and other essential platforms. This will ensure smooth data flow throughout the entire organization.
Customization & Scalability
The software needs to be adaptable to the needs of your business, not the other way around. You should be able to tailor workflows, adjust settings, and enable specific modules relevant to your day-to-day operations.
As your business evolves, the e-procurement solution has to scale seamlessly to handle increased transactions, additional users, or evolving requirements without disruption or significant additional costs.
Customer Support
Apart from onboarding, the vendor should provide you with responsive customer support. You can't rely solely on a salesperson whenever you encounter issues or have questions about the software.
Therefore, look for vendors who offer timely support via email, phone, or live chat. Above that, check the availability of user guides or knowledge bases that help navigate the functionality. Ultimately, you need to get the platform up and running in days, not months.
Security & Compliance
As procurement involves financial transactions, the system has to keep this sensitive data confidential at all times. If you doubt the system's safety, choose a company that will do penetration testing to confirm security.
When selecting an eProcurement solution, ensure it meets compliance standards, such as SOC 2 and GDPR. Additionally, verify its ability to tune roles and permissions. This will allow you to fine-tune access levels and data handling.
Affordability & Total Cost of Ownership
You need to be price-effective in your choice. The solution has to simply fit your budget. Otherwise, you risk overspending and undermining the financial benefits of adopting the software.
It's not just about the initial price; you should also consider the total cost of ownership over the software's lifespan. This includes implementation costs, ongoing maintenance fees (if applicable), and any potential upgrades or add-ons required in the future.
Final Thoughts on Choosing E-Procurement Software
Today, e-procurement software is no longer a luxury but a necessity. A well-chosen solution provides 100% visibility into the entire process, from supplier information to procurement costs.
When making your decision, prioritize factors beyond functionality, such as usability, customization, competitive pricing, and customer support.
Looking to explore eProcurement solutions right here, right now? Schedule a demo and get access to a 14-day free trial to experience how Team Procure solutions can boost your procurement process.
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