Procurement Systems Fundamentals And Guide

What is a procurement system? A procurement system enables organizations of any size to manage their procurement-related tasks and functions. It is a system that ensures procurement activities such as generating purchase orders, reviewing and checking invoices, and sending purchase requisitions are performed efficiently in an organization. Other tasks include approving the goods and services delivered by the vendors and ensuring the right suppliers are selected and managing these suppliers. The procurement system involves regulating the purchase of services and goods from vendors too. The procurement system is also known as the procurement management system.

Which Modules Should You Look For In a Procurement System?

Although the procurement system contains a lot of modules, the following are some of the main ones that the system of procurement should ideally contain.

Integrations

The system should easily integrate with the other applications that are currently in use in your organization. It should work without issues or complications so that it enables you to work efficiently. Moreover, the system should not cause any issues when the other applications are running. This will ensure that the employees are able to work always without any glitches.

Invoices

The procurement system should be able to retrieve and check the invoices, purchase requests, and purchase orders for three-way matching. This is fundamental because it will ensure the approvals are received quickly and on time without delay. Moreover, it will ensure the payments are cleared and sent to the specific parties on time.

Manage Vendors 

You should be able to get information about vendors easily with the help of the system. You should also be able to add new suppliers you work with without any difficulty.

Purchase Orders

The procurement system should contain the purchase order module because once the purchase requisitions are approved then you need to generate purchase orders. The system should enable you to manage all parts of the purchase orders. For example, you should be able to view the purchase order when required and you should be able to track them when you need it.

Purchase Requisitions

The system of procurement should allow you to generate purchase requisitions as they are required in the initial stages of procurement. You should also be able to check the live status updates of these purchase requisitions to see if they have been approved or rejected. This is one of the modules that should be a part of the system because of how vital it is for the process of procurement.

Analytics

The procurement system should enable you to get powerful insights that can help you make the right decisions about procurement. You should be able to track the metrics that can help you understand the performance of different functions. It should generate reports that can enable you to understand your procurement functions and how you can optimize them.

What Makes A Good Procurement System?

A standard procurement system should have the following to ensure it meets your procurement goals.

Supplier Management

The procurement system should enable you to manage your suppliers with ease. You should be able to monitor the performance and past records of each supplier so you know who is good to work with and who isn’t. The system should ensure there are no problems in the supply chain and if any pain points are found then they are resolved before they become bigger issues. This is one of the most vital procurement functions.

Quick Approvals

Approvals are an integral part of the procurement process. And you want the system to provide quick approvals to you when required. This helps speed up the entire process of procurement. When you are choosing a system specifically for procurement, then you should ensure that you choose one that enables you to approve or reject quickly while ensuring you are notified when approval is pending.

Budget Tracking

The procurement system should ensure the organization’s budget can be tracked in real-time. This is a vital part of the system as it enables you to make the right decisions and ensure you are given the right information the moment you require it. For faster and informed decision making you want to know the budget and the system of procurement should ideally enable you to do that so you can make decisions in a snap.

Integration

The procurement system should enable you to integrate with the other existing processes that you use for your organization. This is important because you don’t want any problems after implementing the system of procurement. You want the existing systems to work well and for the system of procurement to work normally too. Both should not cause any problems with each other when they are running simultaneously.

Customization Options

The procurement system should enable you to create workflows that can be tweaked to suit your business. As different businesses have varying requirements, their workflows will differ too. An ideal system for procurement will ensure every business is able to create its workflow easily and effortlessly depending on their PO process. This is one of the top concerns of any organization and so it should definitely be a part of the system.

regards to the purchases.

The right procurement system is one that easily adapts to a business' workflow and creates a marked improvement at every stage of the procurement process. Check out our blog for more procurement-related tips and advice.