We live in a world where everything has been digitalized. Thanks to the digitalization of the processes inside your company, employees can use their skills to perform paid jobs instead of spending time on routine tasks.
In the business world, change is very complex. They require a change in the established business routine, which is why the very thought of implementing new digital solutions causes uncertainty.
Regardless, changes are necessary, because only in this way can you keep up with the dynamic changes and trends in the market. Your customers always expect fast and quality service, and one of the ways you can provide the digitization process. There are solutions that offer easy implementation and fully adapt to your companies that grow with it. One such solution is a procure-to-pay process.
The supply chain has changed throughout history, and it is important that the system evolves in line with technology. The technology provides various benefits, its implementation in the supply chain system allows development so that great benefits can be achieved in better communication between the participants in the supply chain, saving time on delivery of goods between participants and costs.
So, if all this sounds confusing, you probably need some help in understanding how the whole process works. Well, we have prepared some tips which will hopefully help you have a better understanding of this complicated process.
1. Learn the basics of the term
Every company strives to create and manage processes of purchasing and managing supplier relationships strategically. The overall aim is to cut down the material costs, do your best to avoid delays regarding inventory stocks, and successfully solve any issue that may happen in a supply chain.
As procurement is such a complicated procedure sometimes, all companies need to do is understand it better, so they can manage it better.
To put it in one sentence, it’s a process of coordinated actions that are taken in order to fulfill a requirement for some service or goods, in a certain period of time, at a reasonable price. We call it complicated because it has multiple different stages, from identification, via invoice approval, to the final payment. The order of these stages is not flexible, strictly as it is, and if one of them is missed, the purchase cannot be executed fully.
2. Understand how the whole process flows
As we mentioned in the previous point, the process is very rigid and requires every step to be taken in the exact order. It also needs to flow, if the company strives for improvement of the services it provides. The procurement strategy stages are as follows:
- Research. The procurement strategy is based on data, extensive analysis, and research. Find out exactly what the company needs for good service, which products are procured for which department and for what they will be used, what quantities are needed, what budget is available, and what are the best offers from suppliers. Good research and analysis of data allow you to set better and achievable goals, as well as manage resources and time in an optimal way.
- Setting goals. In defining any strategy, it is important to know what the main goals are. Goals must be clearly set and must be measurable. If you have measurable goals and visible results, you will be able to control the process and analyze its success. Regular monitoring of the procurement process is necessary to achieve optimal results. If at any time a situation arises in which you assess that there is no room for improvement and improvement of the process, start re-analyzing, returning to the very beginning. The procurement strategy will be as successful as the process of evaluating objectives and results.
- Defining how you communicate with a supplier. Good relationships with suppliers are key to the procurement process as well as to achieve results. Creating a relationship based on trust is one of the main tasks of all those involved in procurement management. The procurement strategy must have defined patterns of communication with suppliers, which means that within the company you must clearly define who is responsible for them. Responsible people should know what is expected of them and what tactics they will use.
- Choosing the right technology. When the procurement strategy is well designed and all procurement employees follow it, the whole procurement process should be simpler. However, if you do not have the right technology, all the planning effort will not be enough for a great result. Hence it is important to have a good tool that will allow them to manage the entire procure-to-pay process from one place, from requests for goods, works, and services to requests to create contracts. Such a management solution allows employees to order the necessary products and services, having control over who orders what. This simplifies and speeds up the whole process, reduces the possibility of errors, and optimizes resource management. Smart solutions for optimizing procure to pay processes can be found here.
3. What happens next?
After everything is set right with the strategy, three more steps are important to be taken, if a successful procure-to-pay process is what a company needs. These include:
- Creating purchase orders. Prior to this step an order was made and approved by a manager. Once the order is created, it is sent to the supplier.
- Delivery monitoring. The supplier gets the order and answers it by sending back the goods. The company then goes through the contract with the supplier, checking if everything is as it should be. Based on this, the receipt will be approved or rejected. If approved, it needs to be paid, of course.
- Evaluate supply performance. This needs to be done constantly if quality service is what a company strives to establish.
All that we have mentioned in this article are easily set up with a good software tool. It is also customized according to the company’s needs.
Finally, having read so much information, we hope that now you have a clear understanding of this important process.