If you’re like most small businesses, your procurement process is probably a bit cumbersome. Between multiple approval steps, lengthy lead times, and confusion over who’s responsible for what, it’s no wonder that many small businesses feel bogged down by the procurement process.
But it doesn’t have to be this way! There are a few simple steps you can take to improve your procurement efficiency and make your life a lot easier. In this blog post, we’ll give you a starter kit for simplifying your procurement process. Follow these tips and you’ll be on your way to a streamlined, efficient procurement process in no time!
Why is procurement process optimization so critical?
Whether you are starting from scratch or wondering how to make a process more efficient, procurement process optimization is the way to go. Procurement process optimization is so crucial because it can save you thousands of dollars. If the procurement process is not streamlined, you could be wasting time, money, and resources.
Procurement process optimization is not just about streamlining the manual processes of purchasing goods or services. It’s also about making sure that the right people are involved in buying — and paying for — your products and services. It can also be very beneficial when it comes to reducing costs, boosting sales, and increasing customer loyalty.
Here are some of the key benefits of optimizing your procurement activities:
1. Improved efficiency
The time you save by automating your procurement process is worth its weight in gold. In fact, you can expect to reduce your procurement cycle time by at least 50%.
2. Reduced risk
A well-run procurement process will ensure that only valid and complete bids are accepted, reducing the risk of failure. It will also vet your vendors for reputational and financial risks.
3. Better planning
An efficient procurement process will also help you make better decisions about future projects and allocate resources more effectively.
Tips and tricks for making the most of your procurement process
Procurement is more than just a standard operational procedure; it has the power to make or break your company. If you don't have a robust procurement process, you're likely missing out on opportunities and losing money.
The following tips will help you get started on the right path toward making your procurement process run more smoothly:
1. Don't reinvent the wheel
You don’t need to start from scratch and build a new system. Instead, use an existing tool that already exists within your organization or industry sector. For example, many companies use a cloud-based ERP system to streamline procurement. This can help streamline processes like order tracking and inventory management—but it doesn’t have all of the bells and whistles of something like CloudEagle.
2. Don’t oversimplify things
A well-defined procurement process and approval workflows are important to ensure that the correct goods and services are procured in a timely and cost-effective manner. A procurement process should include steps for identifying needs, researching and evaluating potential suppliers, issuing requests for proposals (RFPs), reviewing bids, and selecting a supplier.
It's also important to have clear approval workflows in place so that everyone involved in the procurement process knows who has the authority to approve or reject bids, purchase orders, etc. Having a well-defined procurement process and approval workflows can help reduce the risk of dark purchasing, and also ensure that the organization gets the best value for its money.
3. Don’t be wary of technology
A procure-to-pay (P2P) solution or e-procurement system is a business process management (BPM) software solution that enables organizations to automate and standardize the procurement process. It can help companies to improve efficiency and cut costs by streamlining the purchasing cycle, from requisition through to payment.
4. Don't be afraid to ask for help
If you don’t have in-house procurement experts to spearhead procurement activities then outsourcing is the way to go. Outsourcing your procurement function is ideal because it can provide significant cost savings, improve process efficiency, and increase your organization’s buying power.
When you outsource your procurement function to a Procurement Service Provider (PSP) like CloudEagle, you can take advantage of their expertise and best practices in areas such as category management, contract management, supplier management, and spend analysis.
In addition, our friends here at CloudEagle will often have negotiated lower prices with suppliers than you could on your own, giving you access to better pricing for the goods and services you need. Finally, by outsourcing your procurement function you free up valuable internal resources that can be devoted to other strategic initiatives.
How to simplify your procurement activities
Simplifying procurement activities is a top priority for many organizations as they look to reduce costs and increase efficiency. For example, a Bain research study found that companies who had their procurement processes optimized can not only cut down their purchasing cost by 8 to 12% but also deliver an annual savings of 2 to 3%.
Here are seven steps to simplify your procurement activities:
1. Define roles and responsibilities
One of the biggest causes of confusion and delays in the procurement process is unclear roles and responsibilities. Before you can streamline your process, you need to make sure everyone involved knows exactly what their role is and what they’re responsible for. Once roles are clearly defined, you can move on to the next step.
2. Develop a sourcing strategy
One of the first things you can do to simplify your procurement process is to develop a sourcing strategy. A sourcing strategy will help you identify the best suppliers for your needs, based on factors such as cost, quality, delivery times, etc. It will also help you streamline the supplier selection process by making it easier to compare and contrast different suppliers.
To develop a sourcing strategy, start by creating a list of criteria that are important to your organization. Then, use that list to evaluate potential suppliers and choose the ones that are the best fit for your needs.
3. Set up an approval system
Setting up a clear approval system is crucial for streamlining your procurement process. This will help ensure that all decision-makers are involved in the decision-making process and that there is a clear chain of command. Not sure how to set up an approval system? Check out our blog post on setting up an effective approval workflow for more tips.
4. Create templates and standardize processes
Templates and standardized processes will help ensure that your procurement cycle is efficient and consistent from start to finish. Having templates for common documents such as purchase orders and invoices will save time and reduce errors. Not sure where to start? Our friends at CloudEagle have some great templates that you can use to get started.
5. Conduct regular audits of key suppliers
It's important to conduct a regular audit of key suppliers because supplier audits can identify issues such as unauthorized changes to products, quality or compliance problems, and financial misrepresentation. Supplier audits can also help organizations identify and assess the risk of doing business with specific suppliers. It can help organizations improve their procurement processes by identifying best practices among their suppliers.
6. Automate where possible
Another way to simplify your procurement process is to automate where possible. There are many software applications available that can automate various aspects of the procurement cycle, from sourcing and contract management to supplier performance management.
By automating repetitive tasks, you can free up time to focus on more strategic initiatives. When evaluating procurement automation software, look for applications that offer features such as supplier discovery, contract management, spend analysis, and reporting tools.
7. Implement a procurement intake and approval solution
Procurement approval and intake solutions are software platforms that allow businesses manage their SaaS stack, identify redundant apps, and save on SaaS spend—in one central location. These solutions are becoming increasingly popular among small businesses as they provide visibility into spend, save time with automated processes, and help eliminate dark purchasing.
A SaaS buying and management solution like CloudEagle can provide a number of benefits for businesses, including:
- Improved visibility and control over spending, as all information about the SaaS stack is stored in a central location.
- Elimination of duplicate and redundant apps, as the system can automatically detect SaaS apps and highlight underutilized or unused licenses.
- Reduced processing time, as all the information is available in a single repository where stakeholders can collaborate and get things done faster.
Not sure if a P2P solution is right for your business? Check out our blog post on the benefits of P2P solutions for more information.
How to improve the procurement process with the help of CloudEagle
Businesses have saved over $10 million in saas spending and procurement thanks to the expert advice of CloudEagle. We are proud to offer a proven track record of savings, which has helped businesses reduce their operating costs and improve their procurement efficiency.
Are you wondering how to improve procurement processes? You are at the right place. CloudEagle would not only offer you expert advice on SaaS buying but you can get a bird’s eye view of all your spend and eliminate maverick spend once and for all.
The buyers at CloudEagle understand that different businesses require different solutions. That is why we offer a customizable platform that allows users to determine the right SaaS providers for their needs. Our team of experts is available 24/7 to help you make the most of your SaaS budget, so contact us today to learn more about how we can help you save!
At the end of the day, it’s all about streamlining your procurement process and making it more efficient. By following these tips and tricks, you can save time, money, and resources while also improving how you communicate with vendors.
By following these seven simple steps—defining roles and responsibilities, developing a sourcing strategy, setting up an approval system, creating templates and standardized processes, conducting regular audits, automating whatever is possible, and implementing a P2P solution—you can streamline your procure-to-pay process and make your life a lot easier.
Looking for someone to help take your SaaS procurement process to the next level? Look no further than CloudEagle. Sign up for a free demo today and see effortless yet efficient SaaS procurement could be.