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How is IT helping Trends in Procurements Processes

Technology is helping drive several key trends in procurement processes. These new trends is focus of Procurement transformations in organizations.

1. Integration with other organization processes

The organizational processes are usually organized by functions such as Finance, Accounting, Production Planning, Purchasing etc. As companies realized that lot of time was spent trying to reconcile these processes, the need for integrated processes was realized such as Procure to Pay, Order to cash. ERP systems such as SAP helped companies integrate processes. This freed up time required to be spent on manually solving interface issues between functions and Procurement professionals were able to spend time on strategic activities.

2. Product Category Analysis

As procurement professionals started investing time in strategic activities such as savings opportunities, Category analysis started gaining focus. Each product category had its own unique characteristics and strategic purchaser started specializing on these categories reap benefits. High spend categories were the initial targets as this is where maximum opportunities existed. ERP systems and analytics systems helped companies analyze opportunities for saving costs in high spend categories.

3. Employee self-service

Another area where Purchasing department was spending lot of time was helping employees buy items for low spend categories. As these categories were handled outside of Procurement departments, it resulted in maverick buying by employees. These were then routed to Purchasing department for process handling and entering the data in system.

Organizations started implementing Employee self-service systems such as SAP or Ariba to handle low spend category buying. Employees could search catalogue items and order online using these systems eliminating the need of manual handling of such items. Work flow could be configured to ensure a limit was enforced on such buying.

4. Supplier self-service

Follow up with suppliers on PO approvals, price changes, Invoices, Confirmations etc was another area that takes lot of time of purchasing department. Providing Supplier portals and integrating the process with internal ERP and SRM systems ensured all the follow ups was done online ensuring less time spent on manual follow ups.

5. Electronic sourcing

Sourcing process is handled manually in most organizations. Both suppliers and buyers have to spend time and money on RFX processes, sometimes travelling to meet and respond for auctions. Organizations have started implementing online sourcing systems where buyer and suppliers can collaborate online and eliminate manual work and physical meetings. It also brings greater transparency to the system and more clear dialogues with suppliers.


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