What Is a Procurement Management System?
A procurement management system manages the evaluation, selection, and creation of formal agreements with suppliers. It also manages ongoing supplier relationships and the transactional purchasing of goods and services, working with accounts payable to complete the source-to-settle cycle by processing supplier invoices for payment.
Companies invest in procurement solutions to streamline and automate the source-to-settle process, while controlling costs by directing purchases to approved suppliers. Effective procurement management systems deliver the following:
** Increase influence over spend**—Procurement organizations still struggle with purchasing that occurs outside of formal processes and policies. Procurement solutions enforce compliant purchasing by making it easy for employees to find what they need and direct purchases to authorized suppliers. These systems also implement corporate spend management policies and controls with auditable purchase order workflows to ensure that requisitions are properly approved.
Improve efficiency and automate source-to-settle procurement processes—Cumbersome processes prevent procurement organizations from providing more strategic value to the company. Procurement management solutions standardize, streamline, and automate traditionally manual processes. As a result, purchase approvals are easily managed and resources are freed up for more strategic activities.
Improve supplier management—Qualifying and assessing potential supplier’s capabilities, viability, and compliance with a company’s code of conduct is essential. Alerts prompt procurement professionals when a supplier’s qualifications are expiring or when new information becomes available that might affect supplier qualifications, capabilities, and change their risk profile.
Standardize the contract lifecycle—During negotiations contract reviewers can quickly identify deviations from standard language to highlight risks, make required changes, and gain required approvals prior to finalization. Alerts deliver notifications of expiring contracts to ensure timely renewals and minimize.
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Advances in technology are transforming traditional business practices by disrupting supply markets, changing customer buying patterns, and adding complexity to the supply chain. Procurement organizations must respond to these conditions by taking on a more strategic role in all of the activities surrounding purchasing. And they need solutions that are up to the task.
By moving to the cloud, procurement management systems digitize the procure-to-pay processes with embedded mobile, social, and analytic capabilities and a richer, consumer-like user experience. Leveraging the cloud, companies can modernize and transform their procurement systems to develop more effective sourcing, enforce purchasing policies, and ensure compliance. With modern technology, such as built-in collaboration, embedded analytics, and a more intuitive user experience, companies can control employee spending, reduce supplier risk, and improve cost savings.
Support for a mobile workforce—Today, employees and managers alike are using mobile devices to do their jobs. Modern cloud procurement solutions enable you to leverage these devices to streamline processes, reduce latency, and allow faster approvals.
Efficient collaboration—Gain full visibility across the entire source-to-settle process and exchange documents and messages electronically with your suppliers. Integrated procurement processes facilitate real-time document authoring, reviews, and approvals. Embedded social collaboration enables teams to complete assignments faster and more effectively.
Embedded spend analytics—Increase productivity with user-friendly dashboards that present information clearly and highlight actionable content. Interactive, role-based containers called infolets help users quickly visualize high-level information, review relevant details, and take action. Transactional applications leverage embedded spend analytics in context so that users can quickly decide on next steps in a business process.
Intuitive user experience—A consumer-like user experience helps enforce purchasing management compliance by making it easy for employees to find what they need. Improve user productivity through a more intuitive user experience that provides easy navigation. Users are able to focus on more value-added tasks.
Strategic procurement organizations are increasingly demanding integrated suites that include risk management, sourcing, contract management and proactive supplier management combined with transactional procure-to-pay capabilities. With a complete procurement solution, companies can leverage critical information when making decisions while proactively managing ongoing activities throughout the source-to-settle lifecycle. An integrated, cloud-based procurement management solution consists of the following:
1. Supplier Management
Strategic procurement starts by qualifying suppliers before initiating negotiations. Streamline the collection and monitoring of supplier data to ensure that suppliers comply with corporate policies. Collect important supplier qualification information through internal and external questionnaires and self-service profiles. Select the best suppliers by assessing supplier qualifications, risk factors, and policy compliance. Use embedded social media to collaborate more effectively and achieve business alignment when planning and creating negotiation documents. Receive alerts when new information becomes available that might affect supplier management, capabilities, or risk factors. Suppliers and sourcing teams gain real-time full visibility into transactions as well as current and upcoming sourcing activities.
2. Sourcing
Manually compiling and comparing supplier proposals can be time-consuming and ineffective. Smarter negotiation and supplier selection leverages negotiation best practices to achieve bottom-line results. Embedded social collaboration makes it easy to combine effort to create more effective negation documents. Award analysis tools allow you to quickly evaluate supplier bids based on predetermined factors, such as price, quality, and value, allowing you to arrive at the best possible award based on your unique business requirements.
3. Contract Management
Effective contract management is critical to ensuring compliance, enforcing business policies, and managing risk exposure. A secure, searchable contract repository with complete tracking and audit history enables users to quickly locate what they need. Automated renewals management capabilities ensure that procurement professionals receive early notification of expiring contracts. Contract creation is streamlined with guided authoring that uses preapproved clause libraries, standardized templates, and embedded social collaboration. Analytics identify contract deviations from defined standards and auditable workflows enforce document approvals.
4. Requisitioning
Negotiated savings are quickly lost when buying is not properly regulated during the procure-to-pay cycle. A procurement management solution ensures that these savings are realized through business policies, controls, and approvals. Reduce off-contract spend by providing employees with a consumer-like buying experience. Robust search capabilities, smart forms, shopping lists, and personalized buying experiences ensure that negotiated pricing and terms are automatically enforced through supplier catalogs and configurable approval workflows designed to control spend and reduce costs.
5. Payment
Processing supplier invoices is often manual, error-prone, and time consuming. A complete source-to-settle solution streamlines and automates this critical function, helping you take advantage of early payment discounts and keep costs under control. This includes a robust payment management system that provides electronic transmission, “PO-flipping” from suppliers, and optical invoice scanning. Line level invoice validation is fully automated for faster processing. Exceptions are managed through social collaboration with document sharing to speed resolution times.
6. Purchasing
Automating routine procure-to-pay transactions, such as purchase order creation, frees you up to find new savings opportunities. Streamline the process, while enforcing negotiated pricing and ensuring policy compliance. Create purchase orders from approved requisitions without manual intervention. Provide your buying professionals with insight into exceptions, status, and actions required. Communicate with your suppliers using embedded social tools.
Procurement Cloud modernizes procurement business processes so you can proactively manage suppliers throughout the relationship lifecycle. This complete, integrated, and cloud-based solution enables you to transform your procurement organization to provide fast and compliant procurement services to all areas of your organization. Leveraging digital capabilities such as embedded analytics, social collaboration, and mobile devices, Procurement Cloud enables you to reduce supplier risk, source more effectively, control spending, and improve your organization’s profit Follow @tonylup
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