Analyze and track these 8 Procurement KPIs to reduce costs and have visibility of your procurement team’s performance.
How procurement tools improve collaboration between departments
Collaboration is and will remain essential to a strong procurement strategy. With rising dispersed teams and increasingly remote workforces due to the impacts of COVID-19, effective company-wide collaboration will be key to maximizing efficiency, visibility and cost-management throughout the procurement cycle.
Luckily, the spend management industry has undergone a digital transformation over recent years, and as many as 84% of purchasing departments consider it to be critical for improving procurement performance.
Why procurement collaboration matters
When organizations treat procurement as a non-strategic function separate from the rest of their operations, buying decisions may become misaligned from business strategy. However, even when trying to strategically meet large-scale procurement needs for your entire organization, obstacles can still arise.
Departmental silos may block or delay processes for a start. Approval bottlenecks from slow, manual or incorrect routing and out-of-office staff can cause further delays and inefficiencies.
Furthermore, failing to coordinate spend decisions with the AP department can lead to spending surprises that require time-consuming processes with multiple touchpoints, resulting in late payments and penalties.
Examples of procurement collaboration
Of course, there is a lot of coordination needed to complete an entire procure-to-pay cycle efficiently. This required procurement collaboration can be organized and managed by two categories: internal collaboration and intra-company collaboration.
Internal collaboration streamlines employee communication and enables better interdepartmental collaboration. It provides alignment between team members and ensures they’re notified when action is required. The display of historical actions taken by any user, in any transaction approval cycle via detailed audit trails empowers informed decision making.
Deploying procurement tools that improve internal collaboration can accelerate processes as procurement protocols are centralized, guiding each user to make informed and compliant spending decisions at each stage and touchpoint in a transaction lifecycle. Collaboration is enabled by automated workflows that route requests for the next required action.
Besides traditional approvals, multiple people collaborating in building up a requisition, processing a new supplier, or soliciting input on the need for goods or services to support approvals, or internal audit being notified of an exception are prime examples of internal collaboration.
Alternatively, strong intra-company collaboration refers to maintaining two-way communication with external parties who need to be informed of a transaction. In procurement processes, this commonly refers to your vendor relationship management.
Ensuring your vendors always have timely acknowledgment of orders so they can prepare for them is vital. Supporting intra-company collaboration means they get the time to check for the availability of items in demand to make sure they can fulfill your order, which prevents bottlenecks or slow response.
Examples of intra-company collaboration include purchase order acknowledgement and communications, RFQ responses, payment enquiries, and vendor data updates.
So how can you easily facilitate both internal and intra-company collaboration at once? The key is to leverage procurement tools that offer ease of use to drive the required adoption that encourages a culture of collaboration.
How procurement software features drive results
API–centric solutions can further improve collaboration between applications. Get more value from your systems through API integration to attain visibility, functionality and data points for decision-making. Choosing API-enabled procurement software provides a platform for collaboration, drives digital transformation and fast tracks your path to being a truly data-driven organization.
Procurement tools that enable collaboration
Procurement software enables end-to-end, collaborative spend management while also offering improved efficiency, accuracy and risk management.
In fact, advanced procurement tools can reduce an organization’s purchasing costs by up to 12%, a strong feat considering external purchasing can amount to 43% of an organization’s total costs. To understand how these cost reductions are made not only possible but easy, let’s run through the many procurement software features that facilitate effective collaboration.
Workflow automation: Streamline step-by-step approval authorization workflows by using automation to route requests from one user to the next as you segregate duties.
Assistants: Prevent bottlenecks and delays by allowing users to create requests on behalf of someone else when they’re out of office.
Assignments: Quickly get additional approval by routing a transaction to another role with permissions in place for them to participate or comment.
Supplier take-on: Raise a request with partial information and route it to a relevant user to add more information as you accelerate the journey to getting a new vendor onboarded and approved.
Electronic proforma invoicing: Effortlessly collaborate with your AP department by routing a request to them for further coding, validation, etc. From there, the designated AP specialist can fulfill the request and immediately convert the document into an invoice and send it for approval.
Quoting: Collaboratively build up an RFQ’s information by automating multiple touchpoints. With this feature, you can grab the request out of the queue and work on it, or push it back into the queue for another person’s role until the RFQ is completed with all pertinent information.
Email, in-app messaging and alerts: Notify users when action is required with email or in-app messaging. System alerts flag potential risks and breaches of policy.
Business intelligence (BI) tools: Get the visibility you need to understand how your business spends with meaningful spend data visualization. BI reporting dashboards provide a big-picture view of budgets vs actuals and spend by category.
Mobile app: Collaborate faster, from any location or smart device, with on-demand requisitions, expense reports, approvals, notifications and budget insight.
The benefits of collaboration
Collaborative procurement tools ensure employees are clear on their tasks and accountable due to increased procurement transparency. Employee productivity and engagement rises as automated workflows speed up processes and route requests accordingly, with escalation for higher value items needing further approval.
By nature, procurement collaboration technology combines disparate processes into a single source of truth for your spend data and analytics, providing greater data transparency. This in turn fosters better reporting and forecasting, and smarter purchasing decisions.
What’s to come in the future
And that’s not all! The procurement industry is constantly evolving to be more collaborative and efficient. Let’s explore how innovative procurement software features will make your team and departments’ processes easier.
Streamlined employee communication
In the future, organizations can look forward to seeing increased integration between communication platforms, such as Slack and Microsoft Teams, with procurement software.
Employee communication will be streamlined with in-app alerts and notifications that are non-reliant on emails. Native messaging enabled by fully-integrating your phone’s operating system will reduce the number of channels required for effective procurement processes.
‘Smart’ approvals and AI in procurement
Like the digital shift many industries are undergoing, artificial intelligence (AI) will impact procurement in organizations by reducing time-consuming menial processes and solving complex problems.
Smart approvals will reduce the touchpoints in transactions, based on rules and outcomes learned from previous collaborative transactions. This predictive method of spend management will reduce human intervention and accelerate approval workflows.
Some common uses for AI in procurement and supply chain collaboration include:
• Automatic procurement spend classification into categories and sub-categories
• Vendor matching with invoice and purchase order data
• Automated purchase order and payment reviews and approvals
• Automated compliance and contract management
AI can foster an environment of collaboration and improved decision-making by leveraging data and uncovering saving opportunities.
Maximize your spend management tools
Join the movement to fully-digitized procurement systems to reap the benefits of increased collaboration, visibility, efficiency and cost control.
Interested in learning a little more about expert procurement tools? Click here to read our recent blog on features you should look for when choosing your e-procurement software.