Every business irrespective of their size wishes to achieve off the charts results in its professional field without spending a lump-sum amount of money for the company’s growth and development.
Assume a small town guy named Tom left his home for pursuing his dream of being an ecommerce tycoon. He was low on his budget and minimal warehouse space for his inventory but was high on his determination. The Despair was showing up on his face; his subconscious brain was searching for a solution, when his eyes landed on a website, giving away a procurement software. That was the “Eureka!” moment.
Tom had yet not gone too huge. Hence he was relying on excel to help him manage his business, but excel, being the disconnected software that it is, never updated anything on its own. He then had to wait for the other day to make sure all his records are updated. This process was making his fast selling products go out of stock, and he was holding inventory which was not sellable. Slowly the amount of stock in his warehouse kept increasing, and the ratio of orders to the warehouse cost kept decreasing.
But Tom Solved this using a procurement software, Let’s check how.
What is procurement software?
Procurement software is a software used for automating the mundane purchasing tasks of buying goods by an organization/company. They could be, obtaining goods or generating purchase orders or match invoices to materials received or pay all bills electronically. All of them from one single solution.
Furthermore, SaaS applications are charged based on the subscription rates. Instead of spending a substantial one-time payment, you end up paying for the actual software use.
According to statista, in 2019, the procurement software market is valued at about 5.3 billion USD. Such a massive sum of investment evidently shows how business across the globe is utilizing procurement software.
The global procurement software market is driven by increasing demand for smartphones, which is projected to rise to an estimated value of USD 13.7 billion by 2026, registering a CAGR of 9.76% in the period of 2019 to 2026.
In much simpler terms, procurement software is the one that should have the following functions:
- Create an original purchase order based on need
- Verify a purchase order
- Submit a pending purchase order for approval or rejection.
- Automate electronic purchase-order transmission.
- Generate reminders to confirm recent purchase orders
- Maintain an inventory of goods to prevent spot shortages.
- Execute financial and inventory-related transactions
- Gather data and analyze trends to maximize profitability.
- Streamline administration across multiple platforms.
Why do small businesses need it?
Here are the ways in which procurement software can help small businesses
- Automated Workflows
The entire business process can be fully automated to create a seamless experience. All necessary approvals can automatically be sent to the relevant person and trigger the next step in the process.
- Everything Under One Roof
Procurement software is a unified platform with all relevant functionalities that helps in easing the purchase processes and workflows. The easy processing also ensures that the integrations are seamless and helps in avoiding the delays or technical glitches.
- Reduced CostsProcurement software enables a company to go paperless as everything is saved digitally. This helps in eliminating the costs related to buying papers and saving them.
You can standardize your workflows, forms, purchase order approvals, request for quotes and proposals withe-procurement software. Again, enabling you to cut down costs and any possibilities of deviating from official purchasing policies and authorizations.
- Transparency and Control
An e-procurement system creates centralized purchase management of information, so that requisitions, orders, purchases, and payment information is stored in a centralized location. This can help eliminate duplicate orders and track the procurement cycle, providing accurate and updated inventory, pricing, and availability to all parties.
Tracking improves visibility, providing end-to-end transparency of all transactions in the procurement cycle in the supply chain. Authorizations can be verified, while independent spending is subject to control.
Features that should be in a Procurement Software:
- Great UI
An E-Procurement software is meant to ease your life and save your precious time. End user training for procurement software should take an hour at most and using it should be as easy as sending an email. If you are spending copious amounts of time to figure out how to use it, then maybe it’s time to upgrade to another solution.
- Seamless Integrations
A lot of procurement software has options of integrating their system with third party software, but for the most part, the integration in semi-manual, complicated, and expensive. No one likes to waste time and money and still figuring out the rigorous process of integrating components. E-Procurement software is meant to have seamless and real-time integrations at your fingertips.
Procurement Software should show everyone the information to make appropriate decisions about what to buy and where to buy it. Before submitting of the request, the amount of money left in the budget should be shown up on the screen, so that the person will get to know right away whether or not an item is likely to get approved.
- Customer Service
“Remember Tom? The ecommerce newbie who eased his life by purchasing procurement software. Well, he was happy until he faced an issue that he couldn’t resolve after so many self trials and he doesn’t know where to go to get help.”Tom learned it the hard way the importance of Customer Service and Post-Purchasing Support so that you don’t have to. When you need assistance, it’s soothing to know there will be a human to assist you with your problems. In the procurement process, there is no time to waste, and your e-procurement software provider should try to resolve your problem as soon as possible.
- JIT(Just In Time) Purchasing Just in Time purchasing is a cost accounting purchasing strategy. You purchase goods in the last minute so that they’re delivered just as they’re needed to meet customer demand. With JIT, after you get customer orders, you plan purchases. You purchase the minimum number of items to meet customer demand. For small businesses, keeping items in stock means more hassle for their management. Your e-procurement software should have the ability to sustain the JIT purchasing strategy.
Difference Between Procurement Software Vs Inventory Management Vs Supply Chain Management (SCM)
Not only Procurement Software but according to a Techaisle survey, CRM, supply chain management, inventory management, marketing automation, customer service, ERP, and vertical applications are at the top of the “planning” list for small businesses because they, “address a common SMB business need…[and] work best when the system is accessible beyond the walls of the firm deploying the application, capitalizing on a key advantage of cloud vs. on-premise systems.”
According to Merriam-Webster Dictionary, procurement is “to get possession of something: to obtain something by particular care and effort.” As such, procurement is the process of getting possession or obtaining something. Expanding on that to include the business aspect, it is simply the act of “obtaining or buying goods and services.”
Procurement software delivers control over the supply chain upstream of purchasing. Procurement processes are part of company strategy, because, without the ability to purchase certain goods or services, operations may not be able to continue. Businesses could suffer drastically if operations half even for a short period of time.
Supply Chain Management:
Supply chain definition: “consists of everybody involved in getting your product in the hands of a customer. It includes raw material gatherers, manufacturers, transportation companies, wholesale warehouses, in-house staff, stock rooms, and the teenager at the register. It also includes the tasks and functions that contribute to moving that product, such as quality control, market research, procurement, and strategic sourcing. The supply chain can be considered the entire chair, while procurement and sourcing are parts of the chair.”
SCM is about the process of managing the goods from supplier to customer to eventual end customer. You have to manage timing, quantity, and even the roles of partners in SCM.
Inventory Management Software:
Inventory Management is about the optimal use of the goods you have in store. How many to order, where to store them or even how to package them are all parts of Inventory Management. It is a tool in Supply Chain Management. It is used to make sure you move the items you need, not just what is easiest to work with.
An organization goes through a lot to plan the process that includes purchasing of items, determination of standards, supplier research, negotiation on prices. Organization needs procurement software because when a business has a single interface for procurement related management, it cuts down time and effort required to monitor a company’s spending.
Irrespective of the size in the ecommerce business, whether big or small, you inevitably need a procurement software. The problem arises in choosing the best procurement software that suits up with your business. To ease up your selection process and to choose the right procurement software, you may find this article helpful to know about the benefits of procurement software and must have features of it.