Procurement Solutions - How they can Help Your Business

A business cannot work effectively without efficient and the best procurement solutions. These ensure that the products and services are acquired on time every time. Essential to manufacturing and business operations, procurement management can speed up production and reduce costs.

As procurement is a compliance-driven process, it can be cumbersome, time-consuming, and inefficient when performed manually. Modern procurement solutions are technology driven. They help a business manage the procure-to-pay process efficiently.

Types of Procurement Solutions

Procurement professionals rely on various tools, techniques, and approaches for managing the procurement and supply chain process.

The supply chain management (SCM) system map given below, helps to distinguish the applications based on the level of functionality (strategic, planning/tactical, executional) and how they are linked to stakeholders (suppliers, internal supply chain and customers).

Source: Handfield, Robert B., et al. Purchasing and Supply Chain Management

Enterprise Resource Planning tools integrate core business functions, including accounting, finance, sales, operations, and more, into an integrated package with a shared database.

Supplier Relationship Management (SRM) and Customer Relationship Management (CRM) tools, in contrast, are directly focused on planning and managing the firm’s external stakeholders.

The applications involved in logistics decisions can be broadly classified into three - Network design applications, Transportation and warehouse planning systems and Execution systems. These tools use simulation and optimization models to help procurement teams to make decisions on warehouse locations, allocating logistics capacity, and movement of materials through supply chain.

While strategic activities involve managing supplier development, performance measurement, and new performance initiatives, procurement must still efficiently handle the everyday tasks of purchasing products and services and managing transactions. Day-to-day procurement activities include identifying needs, locating and selecting suppliers, negotiating terms, and constant monitoring to ensure supplier performance. In order to improve efficiency of purchasing, companies rely on procurement tools at various stages of process.

The procurement process begins with needs identification and conducting research on the supply market conditions to know availability of products/services. Once the needs are identified the next step in category strategy development is to gather category intelligence and research on suppliers. In order to develop a solid category strategy its crucial to understand the market conditions and their impact on the category/service you want to procure. The information and insights gathered for this purpose is termed as Market Intelligence.

Market information can be gathered from multiple sources like secondary research reports, external consultants, publicly available databases etc. Procurement teams can rely on outsourced companies as well for their market intelligence requirements. Artificial Intelligence enabled tools , which can provide real-time updates on market conditions, make it easier for procurement teams to analyze the sourcing conditions for their category/service. Beroe LiVE.Ai is an AI-enabled platform that provides market information on products and services. The Market Information module on Beroe LiVE Ai has insights on market outlook, price forecasts, category cost structures and supplier information.

Supplier evaluation is the next stage in procurement process. Supplier research helps to identify the key capabilities of suppliers, understand their financial health and evaluate them on various compliance metrices. Portfolio analysis is a tool used to segment suppliers effectively based on goods or services to be procured from them. For portfolio analysis, suppliers are classified into four major categories : Critical, Routine, Leverage, and Bottleneck. Following are the main criteria to evaluate suppliers:

1. Process and design capabilities
2. Management capability
3. Financial condition and cost structure
4. Planning and control systems
5. Environmental regulation compliance
6. Longer-term relationship potential
7. Supplier selection scorecards

To get information on suppliers, procurement teams rely on online resources and databases. The main challenge faced by organizations today is managing vast array of information available across multiple sources. In order to identify the right-fit suppliers procurement teams can rely on tools that are capable of providing information on qualified suppliers and also helps in their evaluation and monitoring. This supplier discovery module on Beroe LiVE.Ai can be used to shortlist suppliers based on various criteria like location, industry, category, revenue and certifications.

Monitoring current suppliers is equally important to ensure efficient procurement process. Supply shortages faced during COVID pandemic was a wakeup call for many organizations to invest in tools to identify potential risks to their supplies and improve supply chain resilience.

Types of supplier risks include:

• Operational Risk
• Compliance Risks
• Financial Risks
• Geopolitical Risks
• Cyber Risks

Risk management softwares also known as vendor risk management or supplier risk managementsoftwares, play a crucial role in enabling organizations to evaluate, oversee, and control the security risks that come with engaging external service providers. Data combined with advanced analytical tools and skilled individuals will enhance supply analyses and decision-making in multiple areas. Here’s an example of risk monitoring tool, wherein you can access suppliers on various risk and compliance parameters Including financial risk, ethical, labor, environmental, social, governance, sustainability, cyber security and adverse media mentions.

The volume of data available to process can be quiet overwhelming, procurement professionals will have to filter actionable insights from bulk data. Conversational AI's role becomes increasingly significant in this context. With the help of conversational AI, one can get queries on sourcing answered instantly without having to go through large datasets. Beroe’s AI-assistant, Abi, provides automated, productized access to market data, risk, price, cost, and ESG data, helping procurement professionals to operate more strategically.

There are plenty of tools available today to cater to various procurement processes. The challenge lies in identifying the most suitable solution to fulfil your business need.

How to Choose the Right Procurement Solution for Your Business

Selecting the best procurement solution is complex, but there are criteria that can help make an informed decision based on features:

1. Quick Implementation

Implementing a procurement solution isn't as easy as it seems. Technical challenges aside, no one will initially accept the change, especially when it is challenging to learn. The right and ultimately the best procurement solution can help shorten the implementation phase to go live within days while saving time and costs substantially.

2. Instant customer support

Technical glitches are all too common in any software. Ensure that the vendor gives you excellent customer support promptly. Evaluate different vendors on the basis of Mean Time Resolution of support tickets, responsiveness, and self-service capabilities such as an up-to-date knowledge base.

3. Evaluate Features and Plan Customizations

After taking a demo, begin with an inventory of all the functionality in your present procurement system. Segregate between must-have and good-to-have features. Once this is done, discuss functionality that needs to be added. If the post-customization price is right, you can proceed with a purchase.