Smart Procurement: What It Is and How to Begin

Introduction:

Technology is transforming procurement processes in the digital age. Smart procurement is at the vanguard of this change, helping firms streamline procurement and improve operational efficiency. Companies can improve procurement, cut expenses, and make better decisions with automation and data. Smart procurement, how it benefits organisations, and how to execute it will be covered in this article.

What is smart procurement?

Automating procurement tasks with technology is smart procurement. Smart procurement may automate contract, vendor, request, and other processes.

Automation is available in many cloud-based procurement tools. Software automation uses complicated algorithms, AI, machine learning, and NLP. These tools can reduce workloads, but they need procurement professionals.

Systems for procurement automation

• Collect data
• Examine data
• Do calculations
• Inform and share
• Handle workflows

Smart procurement goals and benefits

Smart procurement reduces human interference in monotonous chores. Practitioners can focus on strategic goals by automating lower-value, repetitive procurement tasks.

Automating this work should provide several benefits:

• Improved efficiency
• Lower procurement costs
• Improved consistency
• Better data gathering and analysis
• Faster, more certain decisions
• Improved stakeholder compliance

How you employ smart procurement determines its worth. However, its importance will grow in the next years. Ardent Partners found that 34% of CPOs prioritise automation. Many CPOs prioritised automation over cost savings. The study stated:

Business process automation tools, cloud-based applications, mobile solutions, connected devices, and Big Data are permeating the modern business environment, creating more procurement data each year and giving organisations an extraordinary opportunity (and responsibility) to capitalise on it.

34 percent of CPOs prioritise automation-RFP360

3 procurement automation-ready procedures

Smart procurement is young but expanding. Automation isn’t a one-button solution. It only helps with sections of your procedure, but it frees up time for more vital tasks.

Simple, time-consuming actions are the key to success. Consider your methods. Which duties are most tedious and redundant?

RFP management, contract management, and spend analysis top many procurement teams’ lists. The good news is that procurement automation solutions are currently simple and effective.

1. Issue RFXs

Many manage RFPs and RFXs utilising Word or spreadsheets to gather responses. Procurement managers can manually copy and paste vendor responses to each RFP question into a master RFP response document for a clear comparison. Lots of time and effort are needed.

Fortunately, RFP management software automates and centralises any RFX process, eliminating ctrl+c and ctrl+v. In a case study, AEG’s Scott Bosarge says, RFP automation is valuable.

I can’t put a price figure on it, but creating and launching an RFP decreased our effort by 50%. I also think RFP quality and supplier experience have improved.”

Automate RFPs by creating and collecting stakeholder requirements questionnaires.

• Save dynamic RFX questions and templates
• Make proactive vendor profiles
• Issue vendor RFPs
• Track vendor proposal progress
• Score stakeholders and track
• RFP-weighted scoring

2. Managing contracts

Each year, procurement teams oversee hundreds of contracts. Each contract has tonnes of vital information. Manually collecting, tracking, and auditing the data is heroic. The answer? Software to manage contracts.

You’ve probably used contract management software. These systems use AI and NLP, but you may not realise it. Contract management systems boost contract lifecycle efficiency.

Contract management software automation:

• Contract creation from templates
• Monitoring and negotiating redlines
• Extraction of metadata
• Tracking renewals and termination
• Managing workflow
• Advanced search
• Contract classification

3. Spending analysis

Effective spend analysis is practically impossible without automation. Manually collecting, categorising, and comparing data is inefficient and error-prone. Information is likely outdated by the time it takes to obtain, analyse, and report it.

Automated spend analysis collects data from ERP, invoicing, cost, and other systems. The software classifies spend using machine learning. The technologies offer near-real-time reporting, data visualisation, and strategic forecasting.

Spend analysis automation:

• Classifying and understanding categories
• Identification of spending patterns
• Analysis of macro and micro trends
• Auditing internal and external records

Good procurement practices

Automate your process.

Being savvy about procurement doesn’t imply starting from scratch. Most procurement tech integrates with existing workflows. Simply shifting your process onto a new system will speed up implementation and adoption.

Go small and grow

Starting smart procurement doesn’t cost much money or time. Simply examine your process and discover processes that take a lot of time but little skill. Focus on these first. After using a few tools well, consider expanding your use.

Clean up data

Most smart procurement automation relies on data. Automation is less effective and reliable without clean, accurate, and consistent data. Standardise vocabulary, hold users accountable, and check data accuracy to develop excellent data habits.

Focus on integration

To eliminate gaps in your smart procurement technology stack, make sure your systems function together. To verify compatibility, examine how each system imports and exports data.

Highlight value

Benchmarking before and after procurement automation deployment is crucial. Review your procedure and record manual completion time. Write down the time you saved, how you used it wisely, and the results of your automated efforts. Finally, inform your company and stakeholders.

Smart procurement goes beyond automation. Big picture thinking, maximising a lean procurement team’s value, and minimising procurement expenses are equally important. Automation will become more important in procurement over time. Why not start now?

Conclusion:

Smart procurement improves efficiency and value by fundamentally changing procurement processes, not just embracing new technologies. Businesses can improve procurement processes and position themselves for success by automating tedious procedures, enhancing data accuracy, and integrating. Smart procurement strategies will help companies stay competitive and achieve operational excellence as digital tools and analytics become more important. Start today to maximise smart procurement and create a more nimble and effective procurement function.