Why is procurement and purchasing management important?
Purchasing and supply management play an essential role within a company. Although closely interwoven in a supply chain, these management methods are nonetheless different and have their own specific challenges. What are these issues? What is thestrategic importance of purchasing and supply management? Find out why in this article.
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What you need to know about supply and purchasing management
What is it?
Procurement is a system that enables companies to meet their needs for services or products. It’s a management process that helps keep your company running smoothly. Under this system, your company purchases goods, raw materials and so on. These can then be stored, resold or processed. For a company, procurement is essential.
What are the main objectives of this system?
Good supply management reduces purchasing and storage costs, enabling your company to optimize costs andanticipate overstocking or out-of-stock situations. In short, poor cost management can lead to high and unnecessary expenditure.During the procurement process, your organization’s objective is to access quality products under the best possible conditions. As a result, you’ll be able to obtain the essential elements to improve the final value of your products and the profitability of your services.
How important is the procurement process?
In procurement, an organization must commit funds to buy the goods and services it needs. According to statistics, in 2019, companies spent 30 th of their budget on purchase orders that had no major impact on internal purchasing. The more efficient a procurement cycle and the more optimized the purchasing process, the more positive an effect it will have on the company’s bottom line.
According to a 2018 Pulse of Procurement survey conducted by Zyncus, it turns out that 54 he majority of companies with a procurement function focus on cost savings. This shows that a large proportion of companies admit that outdated procurement methods generate unnecessary expenditure. They prefer to focus on efficient execution. A good supply and purchasing management system will:
- Reduce unnecessary expenditure;
- Limit process flow;
- Help improve supplier relations;
- Facilitate risk management.
For the supply chain to function optimally, supplier performance must be periodically improved. To this end, the company needs to check that order fulfillment complies with the chosen standards. This evaluation makes it easier to identify the chain’s strengths and weaknesses.Anticipating potential risks also promotesoperational efficiency and profitability. It’s a good strategy for anticipating supply-related complications, and provides an incentive to improve inventory management.An effective sourcing strategy, combined with periodic quality checks, optimizes the various stages of the supply chain. It’s a great way to save money.
Why opt for an automated system?
Establishing a procurement strategy is a challenging task. However, by opting for an automated ordering system, you can anticipate problems in the chain and eliminate human error. Purchasing and supply management software helps to simplify the purchasing process.
An efficient solution
Purchasing software is a fast and accurate digital management tool. It regulates the purchasing process according to quality and organizational standards. With this tool, it will be less and less necessary to mobilize manpower during procurement. It offers the possibility of generating detailed order reports to analyze all costs. Real-time data helps optimize stock levels, ensuring better supply chain organization andavoiding unnecessary expenditure.
Reduces human error
With purchasing management software, human control is redirected from administrative management to performance indicators. It considerably reduces operational errors and improves the achievement of objectives defined by the company’s purchasing policy. Information is both transparent and centralized, facilitating and optimizing analysis and evaluation of the procurement cycle. With this solution, all employees involved in the procurement process benefit from an automated system. Data is shared seamlessly between internal and external operations, and each can be carried out without confusion. Every team member has access to the same page and the same information. This reduces the risk of discrepancies within the supply chain.
Optimizes procurement and purchasing strategy
Supply management software can take into account the objectives imposed by the company. Supply and purchasing management is a process that requires precision, as well as human and technical resources. Automated purchasing software such as Weproc can make it easier. In this way, your organization can increase savings and profits.
Want to learn more about our procurement management software Weproc? Contact us or request your free 15-minutes demo below!
Weproc is a SaaS software specialized in digitizing the procurement process of companies. From purchase requests to supplier invoicing, through the validation process, Weproc is designed to simplify the purchase management of SMEs and mid-sized companies by centralizing all purchase-related activities.