Your procurement team wears multiple hats and faces multiple issues on a daily basis. Your team faces issues such as getting high-quality materials, finding the right vendors, dealing with procurement duplication and fraud.
Drawbacks of a Traditional Procurement Process:
1. Increases The Risk Of Fraud And Duplication
A traditional procurement process is mostly a paper-based system. Eventually, the documents pile up, and it can become a challenge for your team to keep track of contracts. That’s one of the biggest reasons for an absence of transparency in a procurement process.
And a lack of transparency can increase the risk of duplication and/or fraud in contracts. Such things can not only hurt your company but also destroy your reputation.
2. Causes Disorganized And Ineffective Data Management
A traditional procurement process is predominantly based on paperwork. For the record, 54% of companies prefer a paper-based invoice process. As a result, it can be challenging for your procurement team to effectively organize your documents.
Besides, it increases the risk of errors and tampering or loss of information and data. All of which may harm your company.
3. Causes A Redundant And Time-Consuming Process
A traditional procurement process is complex and often involves many unnecessary steps. As a result, both your company and the vendors can end up spending more time than required. It also affects the inter and intra communication of your company.
So a traditional procurement process, in turn, not only impacts the productivity of your company but also increases the procurement process timeline.
So, it’s better to automate your procurement process and address the above-mentioned issues efficiently.
4. Reduces Paper-Based And Manual Errors
If your procurement process is paper-based, then there are more chances for errors. A paper-based process involves a lot of risk such as the loss of documents. It can also make it difficult to track deadlines. These issues can result in a time-consuming procurement process.
And 54% of companies still use paper-based invoice processing. It consumes a lot of their time, which could be better utilized doing other important tasks. That is why you need to automate your procurement process.
It will help you decrease the number of errors. Also, a paperless process makes it easier to store data and information online and it provides better security.
5. Controls Company Expenses
When you have a manual procurement process, then it becomes difficult to keep track of purchase orders. It also becomes difficult to manage the approval of purchase orders by the right parties.
However, the automation of your process will make sure that the approval of expenses and goods are done by the right parties.
With the help of automation, you can also conduct an audit and monitor the expenses of your company. This will help you control your spending.
6. Reduces Average Cycle Time
Delays in your procurement cycle are one of the biggest and most common issues in a manual procurement process. Automation can help you efficiently address this major issue. It can help you reduce your average cycle substantially.
What do you do if one of your teammates is on leave or out of the office? You can just set an alert or reroute command of a task if it’s not completed in the assigned time period.
7. Enhances The Speed And Efficiency Of The Procurement Process
By automating the entire procurement process, you can significantly enhance the speed and efficiency of the process. Also, automation can deal with not as essential and repetitive tasks in the procurement process.
Besides, it helps you save a lot of time so that you can focus on and handle other valuable and complex functions
in the procurement process.
8. Helps You Create A Transparent Procurement Process
With the help of automation, you can gain 360-visibility, which will help you create a more transparent procurement process. It will also help you track your spending and ensure that your budget is not misused.
You can also effectively measure your KPIs. Which will give you an overall understanding of how well your procurement process is working.
9. Helps You Create An Organized Data Management System
As mentioned earlier, a traditional procurement process increases the risk of duplication and fraud in contracts.
Automation can help you create an organized and efficient data management system. As a result, it helps you control the risk of duplication and fraud in contracts. It allows your procurement team to track down the required documents quickly.
Check out this infographic created by PurchaseControl to learn more about common procurement process problems and the ways that automation can help.
Author Bio – Michael
Founder & CEO with international experience in Procurement and Spend Management