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How Automated Buying Accelerates Purchasing Cycle Time in 2024

How Automated Buying Accelerates Purchasing Cycle Time in 2024
How Automated Buying Accelerates Purchasing Cycle Time in 2024
Gain a competitive edge with automated buying. Uncover the power of data-driven decision-making and proactive inventory management.
Posted in: Business Management
How Automated Buying Accelerates Purchasing Cycle Time in 2024
How Automated Buying Accelerates Purchasing Cycle Time in 2024

Many forward-thinking companies are constantly on the lookout for ways to streamline their operations and enhance efficiency. One effective strategy gaining traction is the integration of technological innovations, such as automated buying or automated purchase system, into their business processes, so in other words it helps bring automated purchasing process power to businesses

Procurement, or purchasing, plays a crucial role in any business operation. Transitioning to smarter procurement solutions, like automated buying, offers a multitude of benefits that we'll explore shortly.

Today, procurement automation software, also known as e-procurement, is readily available. Its effectiveness has fueled significant growth in the procurement augmentation software market, projected to reach around $14.1 billion by 2030. This surge can be attributed to various factors, including companies seeking to meet increasingly demanding customer expectations, such as faster delivery, with fewer staff.

Simultaneously, job opportunities in the UK have been on the rise since January 2022. In May 2022, there were more job openings than unemployed individuals for the first time on record.

Enter purchasing automation, or automated buying, a technology-driven solution revolutionizing how businesses manage their supply chains. Automation programs streamline procurement cycles by eliminating repetitive manual tasks, allowing teams to accomplish more with fewer resources.

The software's innovative data-first approach, as seen in modern forecasting systems, enables businesses to anticipate periods of high demand and plan accordingly, enhancing overall efficiency and responsiveness.

What Is Automated Buying or automated purchasing?

So the question is what is a automated business? 

Automated buying, also known as automated purchasing or e-procurement, is the process of using technology to streamline and simplify purchasing activities. Imagine having a virtual assistant dedicated solely to managing your company's procurement needs—that's the essence of automated buying.

This can involve leveraging software solutions and algorithms to handle everything from sourcing suppliers to placing orders and managing inventory. Picture a scenario where, instead of manually comparing prices and negotiating with vendors, your system does everything for you swiftly and efficiently.

For example, let's say your business regularly purchases office supplies. Automated buying allows you to set up predefined rules and preferences within the system. 

When it's time to restock, the software automatically identifies the best deals from approved suppliers, places orders, and even tracks deliveries – all without requiring manual intervention.

Moreover, automated buying isn't just about saving time and effort; it's also about optimizing processes and minimizing errors. Removing the human element from routine procurement tasks reduces the likelihood of mistakes like double orders or missed deadlines.

So, automated buying represents the future of procurement, offering businesses a more innovative, efficient way to manage their purchasing needs. It's about harnessing the power of technology to streamline operations, cut costs, and drive more excellent value across the entire supply chain.

Its also worth mentioning that leveraging AI tools can help automated purchase orders, emerging technologies, or specialized software, businesses can streamline their procurement procedures and optimize supply chain management for optimal efficiency.

Why should you automate your procurement process?

Why should you automate your procurement process

 Let's talk about why automating procurement is such a game-changer. 

Here are six big reasons:

  • As a procurement professional, imagine the boost in productivity when you automate your tasks. It's like giving your team superpowers, allowing them to zoom through routine stuff and focus on the juicy strategic projects instead. 
  • Bye-bye Errors: Manual slip-ups can be a real headache. With automation, you can say "so long" to those costly mistakes and hello to smooth sailing.
  • See Where Your Money Goes: Procurement automation gives you a backstage pass to your spending habits. You'll see who's getting your cash, how much, and where you can save a buck or two.
  • Everything in One Place: No more scavenger hunts for data! Automation keeps all your procurement info neat in one spot. That makes audits and reports a breeze and keeps everyone on the same page.
  • Teamwork Makes the Dream Work: Automation isn't just for robots; it's for people, too. By automating, you're making it easier for your team to collaborate. Smooth processes mean quicker decisions and better results.
  • Get the Green Light Faster: Approval processes can be a real slog. But with automation, you can set up transparent workflows and automatic alerts. That means approvals happen lickety-split, keeping things moving smoothly.

If you want to stay ahead in the business race, hopping on the automation train for procurement is a smart move.

Breaking Down Of The Purchasing Procedure

Procurement or purchasing in any business involves a series of essential steps, each crucial for efficient operations and cost management. 

Here's an overview, supplemented with pertinent statistics where available:

  • Identification of Need: The process begins with internally identifying the need to procure goods or services. This step is fundamental and sets the stage for subsequent actions. According to a survey by Deloitte, 74% of procurement leaders consider internal alignment critical for successful procurement processes.
  • Supplier Selection: The next step involves selecting the appropriate supplier once the need is identified. This decision often relies on existing relationships, though competitive bidding processes are standard. A report by Gartner indicates that 63% of procurement professionals view supplier management as a top priority for their organization.
  • Purchase Order Generation: A purchase order formalizes the agreement with the supplier selected. This document outlines the transaction's specifics, including pricing, specifications, and terms and conditions. According to a study by The Hackett Group, 72% of organizations have automated their purchase order processes to streamline operations and reduce errors.
  • Managing Deliveries and Invoices: The procurement team oversees the delivery process upon receipt of goods or services. This involves verifying that received items match the purchase order specifications. Once validated, the supplier sends an invoice, which is then processed by the procurement staff. A report by ProcureCon found that 68% of organizations have implemented automated invoice processing systems to improve accuracy and efficiency.

By adhering to these steps and leveraging data-driven insights, businesses can optimize their procurement processes, driving cost savings and operational excellence.

Automated buying examples

Automated buying examples

 Here are a few examples of automated buying examples.

1.Accelerating onboarding procedures at Nike 

Nike, a leading global athletic apparel brand, embarked on a journey to simplify their extensive vendor onboarding protocol. With the introduction of an automated workflow, they were able to centralize supplier information and gain enhanced visibility into the onboarding journey. 

This successful implementation resulted in a substantial improvement in data precision and a significant 50% decrease in factory onboarding duration.

2.Streamlined vendor management at UPS

UPS, a global logistics and shipping company, developed a tailored, fully integrated automated Vendor Master Data Management platform using Appian to enhance their procurement operations. With over 320,000 users worldwide, the platform empowers vendors to self-manage, enhancing both employee and end-user satisfaction. Appian automates various tasks within the process, including initiating cases, form submissions, approval requests, and data replication in the eProcurement system.

The standardized process established in Appian ensures compliant vendor selection and automatically generates audit-relevant information, previously scattered across emails or susceptible to deletion errors. The user-friendly interface of the new platform delivers a seamless process and improved user experience to the extent that users require minimal training on the intuitive interface, leading to additional cost savings.

3.Optimized supplier management at FedEx 

FedEx, a renowned global courier delivery services company, implemented a bespoke, fully integrated automated Supplier Relationship Management system using Pega to streamline their procurement processes. 

With a user base exceeding 300,000 worldwide, the system enables suppliers to autonomously manage their information, enhancing both internal and external stakeholder satisfaction. Pega automates various aspects of the process, including initiating requests, form submissions, approval workflows, and data synchronization across platforms.

The standardized processes enforced through Pega ensure consistent supplier evaluation and automatically compile audit-ready documentation, previously scattered across disparate systems. 

The user-friendly interface of the new system ensures a smooth workflow and improved user experience, reducing the need for extensive training and resulting in significant cost savings.

4.Efficient vendor coordination at Coca-Cola 

Coca-Cola, a leading global beverage company, instituted a customized, fully integrated automated Vendor Management System using ServiceNow to optimize their procurement operations. 

With a user base exceeding 350,000 worldwide, the system empowers vendors to efficiently manage their profiles, enhancing overall operational efficiency and stakeholder satisfaction. ServiceNow automates various tasks within the vendor management process, including initiating requests, form submissions, approval workflows, and data synchronization across platforms.

The standardized procedures implemented via ServiceNow ensure consistent vendor evaluation and automatically compile audit-relevant data, previously scattered across various communication channels. 

The user-friendly interface of the new system ensures a seamless workflow and enhanced user experience, minimizing the need for extensive training and leading to notable cost reductions.

Challenges of the manual procurement process

Challenges of the manual procurement process

The manual way of handling procurement comes with its fair share of challenges that can really slow things down and increase the chances of mistakes. 

For starters, relying on emails, spreadsheets, and manual data entry means it takes longer to create purchase orders and process invoices. This not only drags out the whole procurement process but also opens up the possibility of missing important details or losing track of information along the way.

Then there's the issue of transferring data between different systems, like quantities, prices, or vendor info. Doing this manually often leads to errors, which can end up costing a lot and causing inconsistencies. 

These errors not only mess up the procurement workflow but also put a strain on relationships with suppliers and mess with financial records. It's a big deal to deal with these risks and inefficiencies, so it's important for organizations to see the need for a more solid and automated system.

Plus, having data scattered across different systems makes it hard to see the bigger picture of spending, supplier performance, and inventory levels. But if automated procurement systems are put in place, these visibility issues can be sorted out, giving organizations real-time data and insights. This helps them make smarter decisions and fine-tune their procurement strategies, which ultimately boosts efficiency and saves costs.

On top of all that, manual processes make it tough to enforce and keep track of compliance with regulations and internal policies. Without automated checks and balances, organizations are at risk of facing penalties, losing money, and damaging their reputation. 

And as procurement needs grow and change over time, manual processes might struggle to keep up, leading to overwhelmed teams and more chances of errors and delays. 

Risks of manual procurement process

The procurement game has changed big time with globalization. Are you relying solely on manual processes these days? 

Risky move. Here's why:

  • Human biases and errors pose threats of fraud and data inaccuracies, potentially leading to financial losses and erroneous business decisions. Market, operational, and delivery risks further compound these challenges.
  • Manual systems are prone to delays and bottlenecks, which can irreversibly lengthen process cycles.
  • Indirect purchases are more susceptible to overspending in manual processes.
  • Paper-intensive manual processes increase the likelihood of document displacement and damage.
  • Vendor management can become arduous, resulting in delays and strained vendor relationships.

Progressive businesses are increasingly adopting procurement automation software to mitigate the risks inherent in manual procurement processes. While cloud-based services are gaining traction, leveraging AI (artificial intelligence) and RPA (robotic process automation) can further enhance automation. 

RPA, in particular, offers rapid and precise process automation. Thus, the focus now shifts from whether to automate procurement to identifying the most suitable procurement automation software available.

What Good Can You Get Out Of Automated Purchases In The Supply Chain? 

 Automation software, such as AgilityPortal, offers a comprehensive solution streamlining multiple facets of the procurement process. 

Here's how AgilityPortal can facilitate various procurement tasks:

  • Identification of Goods Requirements: AgilityPortal assists in identifying and defining the requirements for goods or services, ensuring clarity and alignment within the organization.
  • Processing Requisition Forms: The software efficiently processes requisition forms for internal purchases, simplifying the request and approval workflow.
  • Vendor Selection: Utilizing data-driven insights, AgilityPortal aids in selecting the most suitable vendors and optimizing supplier relationships and procurement outcomes.
  • Purchase Order Generation: With AgilityPortal, purchase orders can be generated seamlessly, incorporating essential details such as pricing, specifications, and terms and conditions.
  • Purchase Management: The software provides tools for monitoring and managing the procurement process, from order placement to fulfillment, enhancing transparency and control.
  • Delivery Approval: AgilityPortal facilitates the approval of goods or services delivery, ensuring that received items meet the specified requirements before final acceptance.
  • Invoice Management and Processing: By automating invoice management and processing, AgilityPortal reduces manual errors and accelerates the payment cycle, improving efficiency and accuracy.

With AgilityPortal's integrated capabilities, businesses can streamline their procurement operations, enhance collaboration, and achieve greater agility in responding to evolving market demands.

Benefits of Procurement Automation examples

Automating your procurement process is a game-changer. It saves money, ramps up efficiency, and supercharges productivity. But here's the kicker: picking the right software is crucial. You need something that covers everything from finding suppliers to keeping them happy. That's where cloud-based solutions come in clutch for most companies. 

When it comes to what to automate, think purchase orders, requisitions, invoice approvals, and keeping those records straight. 

1. Employees will be more productive.

You know how processing purchase orders and sifting through stacks of documents can feel like wading through molasses? It's not just a time suck, but it can also jam up your whole supply chain. Think about it: there's this annoying delay between receiving a purchase order, getting it processed, and finally placing orders for what you need.

But hey, imagine this: with automation, you're waving goodbye to those bottlenecks. It's like pressing the fast-forward button for your business. Suddenly, your team isn't drowning in paperwork anymore. They've got more room to breathe, more time to actually connect with customers and drum up new opportunities.

So yeah, productivity? It's not just a buzzword anymore. It's the real deal. 

2. More visibility into past spending

You know what's like digging up buried treasure for your team? Procurement automation software. Seriously, it's a goldmine of info! Picture this: you've got access to all your past purchases, order history, quotes from suppliers, and even the status of your current contracts. It's like having a crystal ball for your company's spending habits.

With all these juicy details at your fingertips, making management decisions becomes a breeze. You're not just shooting in the dark anymore. Nope, you're armed with data that guides you in the right direction. 

So, when it comes to spending smartly, consider this software your trusty sidekick.

3. Reduced operational costs

Orders are meticulously structured, considering stock levels, production needs, incoming purchase orders, and sales demand. 

There's no room for guesswork in sourcing inventory or raw materials. This approach minimizes the risk of excess inventory, ensuring the company avoids stagnation of products and keeps operational expenses in check. 

4.Managers are empowered to make informed decisions in real-time.

 With access to up-to-the-minute data, management operates at the forefront of decision-making. 

This wealth of real-time information provides invaluable insights and visibility, enabling managers to navigate confidently and make precise, well-informed choices that steer the company toward its objectives.

5.Enhanced Supplier Relationships Through Procurement Automation

Establishing enduring partnerships with suppliers hinges on transparent communication channels. Procurement automation, with its real-time interaction capabilities, fosters a sense of reassurance between companies and their suppliers.

This seamless communication streamlines order tracking, enabling both parties to monitor progress and identify potential cost and time savings. Should any discrepancies arise, having access to accurate data facilitates swift conflict resolution.

Moreover, buyers can efficiently allocate orders based on the most favorable quotes within an automated procurement system, while suppliers can promptly respond to bids. This efficiency strengthens collaboration and cultivates a mutually beneficial environment for sustainable business relationships to flourish. 

6.Enhanced Data Security with Procurement Automation

The transition to digital record-keeping exposes businesses to heightened cybersecurity risks, necessitating robust defense mechanisms against potential cyber threats. Combatting online attacks entails significant costs, including addressing the initial breach and mitigating potential repercussions such as reputational damage.

Procurement automation serves as a shield against such threats by empowering companies to implement stringent security measures. 

Through customizable security settings, access to the system is restricted to designated employees, minimizing the risk of unauthorized entry. Additionally, team members are granted access solely to functionalities pertinent to their job roles, further fortifying the system against potential vulnerabilities. 

This proactive approach not only safeguards sensitive data but also bolsters overall resilience against evolving cyber threats in the digital landscape.

Automated purchasing tools

Automated purchasing tools are software solutions that streamline and optimize the procurement process. They can range from standalone applications to integrated modules within more considerable enterprise resource planning (ERP) systems. These tools typically automate various aspects of purchasing, such as supplier management, purchase requisition generation, purchase order processing, invoice management, and inventory control. 

Some common examples include Coupa, SAP Ariba, Oracle Procurement Cloud, and Procurify we will get into the 10 Must-Try Business Process Automation Tools in 2024 below

These tools help businesses save time, reduce errors, improve compliance, and ultimately enhance efficiency and cost-effectiveness in their purchasing operations.

What Should You Look for in Procurement Management Software?

When selecting procurement management software, it's crucial to involve your procurement team in the process. 

Their insights and needs are invaluable in ensuring the software meets your business needs effectively:

  • Functionality: Look for software that offers comprehensive functionality to cover all aspects of the procurement process, including sourcing, supplier management, purchasing, contract management, and spend analysis.
  • Ease of Use: The software should have an intuitive interface and user-friendly features to facilitate adoption by your team members. Look for solutions with customizable dashboards and workflows to tailor the system to your specific requirements.
  • Integration Capabilities: Choose software that integrates seamlessly with your existing systems, such as ERP, accounting, and inventory management software, to ensure smooth data flow and minimize manual data entry.
  • Scalability: Consider the software's potential for growth and adaptability. It should be able to handle increased transaction volumes, support multiple users, and accommodate changes in your procurement processes, giving you confidence that it will grow with your business. Cloud-Based vs. On-Premises: Decide whether a cloud-based or on-premises solution suits your organization. Cloud-based software offers greater flexibility, accessibility, and scalability, while on-premises software provides more data security and customization control.
  • Supplier Management: Evaluate the software's capabilities for managing supplier relationships, such as onboarding, performance monitoring, and contract management. Look for features that enable you to track supplier information, negotiate contracts, and collaborate with suppliers effectively.
  • Analytics and Reporting: Look for software that provides robust analytics and reporting capabilities to help you gain insights into your procurement performance, identify cost-saving opportunities, and track key metrics such as spend analysis, supplier performance, and contract compliance.
  • Compliance and Security: Rest assured the software we recommend complies with industry regulations and security standards to protect sensitive procurement data. It includes role-based access controls, encryption, audit trails, and compliance management tools, ensuring your data is safe and secure. 

If you consider these factors and conducting thorough research and testing, you can select procurement management software that aligns with your business goals and drives efficiency and effectiveness in your procurement processes.

10 Must-Try Business Process Automation Tools in 2024

Here's a list of automated purchasing tools:

  1. Coupa Procurement: is a cloud-based procurement platform that streamlines purchasing processes, manages supplier relationships, and enhances spend visibility.
  2. SAP Ariba: Offers end-to-end procurement solutions, including strategic sourcing, contract management, supplier management, and procure-to-pay processes.
  3. Oracle Procurement Cloud: Provides a comprehensive suite of procurement applications, enabling efficient sourcing, purchasing, and supplier management.
  4. Jaggaer: Offers a range of procurement solutions, including spend management, supplier management, sourcing, and contract management, tailored for various industries.
  5. Procurify: A user-friendly procurement software that simplifies purchasing workflows, tracks spending, and improves procurement transparency.
  6. GEP SMART is a unified procurement platform that integrates sourcing, procurement, and supplier management capabilities to drive efficiency and cost savings.
  7. Basware: Provides e-procurement solutions for automating purchasing, invoice processing, and supplier collaboration to streamline procurement operations.
  8. Ivalua: Offers a cloud-based procurement platform with capabilities for strategic sourcing, procurement, contract management, and supplier collaboration.
  9. Zycus: Provides procurement software solutions for strategic sourcing, contract management, supplier management, and procure-to-pay processes.
  10. BirchStreet Systems: Specializes in procure-to-pay solutions for the hospitality industry, offering tools for purchasing, inventory management, and supplier management.

These are just a few examples of automated purchasing tools available in the market. Each has its own set of features and capabilities to meet businesses' diverse needs.

Wrapping up 

In conclusion, automated buying technologies revolutionize the purchasing landscape, significantly accelerating the procurement cycle for businesses across industries. 

Organizations can streamline purchasing processes, enhance efficiency, and drive cost savings by leveraging advanced software solutions and cutting-edge technologies such as AI and robotic process automation

The benefits of automated buying extend beyond speed, encompassing improved accuracy, enhanced visibility into spending, and strengthened supplier relationships. 

As businesses continue to embrace automation in procurement, they position themselves for greater agility, competitiveness, and success in today's fast-paced marketplace.

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Tuesday, 28 May 2024
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