Manage Purchasing Efficiently

How to improve your procurement processes

Procurement processes are often distributed throughout a company’s business units, and following the right procedure in a timely fashion is often a challenge.  Lost Purchase Order requests, unclear or delayed approval cycles, time‐consuming reconciliation of POs with deliveries and invoices – these process issues frequently affect buyers company‐wide.

From the financial management point of view, optimizing cash flow, negotiating best prices with suppliers, and limiting financial risk are among the procurement process issues that can directly affect the company’s bottom line. This makes good management of procurement processes of key strategic interest.

Improving the purchasing function often requires organizational transformation. There are generally two types of approaches:  

• BPR or Business Process Reengineering, which uses process optimization to review the functioning of procurement functions;  
• The establishment of shared services, to centralize support functions (including purchases) to optimize costs and standardize practices.  

Management of the procurement process, while it may seem trivial, is a process with many challenges. When it is handled by many systems, such as ERP and others, no single implementation can actually meet all the specific needs of an organization. In addition, evolution and continuous improvement of these processes require that they be managed using more agile tools. In this context, the use of a system such as a BPM suite to manage all or part of the process means your company benefits from its flexibility, while ensuring the necessary security for this critical process. A BPM suite with wide connectivity capabilities means your purchasing process can interface with all systems involved in the chain, and you can automate as many tasks as possible while maintaining the ability to manage individual exceptional cases through more manual processes.

In this paper, we discuss the various requirements that a good procurement process should meet, then look at how troublesome procurement processes, including those that are already heavily integrated with the company ERP, can be transformed by applying Business Process Management approach and tools.