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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy

Procurement Management 2024 — The Ultimate Guide for Professionals

Key takeaways

  • Adopt digitization in procurement management to maximize company spending and maintain effective budget control.
  • Outdated techniques lead to chaotic procurement management, highlighting the need for automation and modernization.
  • Invoice approval, requisitions, vendor management, and contract approval, are among other essential digitized procurement operations.

In this day and age, procurement management is already digitized. Gone are the days when paper trails were often chased to make an account for every spending done by the company. Today, it’s all about data and making sure that your company’s spending budget is accounted for.

This article will tackle procurement management. You will learn its definition and the ways how to digitize procurement processes.

After reading this article, you will realize that sticking to the old ways of paper business making is now a thing of the past. You must move forward and start to rely on the power of AI and automation to keep your company’s spending at an optimal level.

Why is Procurement Management Planning Not Moving Forward?

Procurement management is the tactical approach of managing and optimizing the spending capacity of an organization or company. With that said, isn’t it only natural for a company to start investing in a program to help ease the procurement process?

Creating a project procurement management is a highly intricate plan. It involves data collected from suppliers and vendors with metrics painstakingly created and established by a company’s procurement department. Because it involves too much data, there will always be instances where information may go missing or metrics are forgotten. 

This scenario is called chaotic procurement management. More often than not, it has caused a lot of companies serious problems with budget management and its overall procurement process.

This scenario is often caused by a company’s over-reliance on manual procurement management and traditional paper-intensive procurement practices. The results vary from lost documents, delays in the approval of procurements, and high processing costs. 

While huge or enterprise-level companies are often guilty of not modernizing the idea of a procurement process, there are some instances where the culprit is based simply on the company’s history. In Japan, companies still rely on old business and procurement standards simply because it has always been the tradition inside the office. 

All is not lost though. More and more businesses are now realizing the power of creating a modern procurement management plan. It also helps that there are many ways to create your procurement plan and that all it takes is the automated workflow of well-developed procurement software. 

Procurement and Supply Chain Management: What Needs Digitizing?

Procurement management planning has many functions. And because it has many functions, simply forgetting one little detail with the whole procurement system is enough to trigger a bunch of problems once the procurement process is set into motion.

But if you haven’t started digitizing your procurement management planning, there’s no need to fret; we can give away these five easy ways to improve your procurement management plan for free. These are but a small part of our Gamechanger Negotiation certificate program, so you might want to check it out later! 

To avoid a chaotic procurement process, here are some functions of procurement management planning that need to be digitized:

1. Purchase Order – Until now, many companies still rely on paper for creating and submitting purchase orders. With a procurement management system, there should be no need to look for paper receipts when purchasing orders. There is already much software that automates purchase orders based on how much the company needs.

2. Invoice Approval – The long wait time for the approval of invoices wastes so much time that could have been spent on other tasks for the day! With the help of automated software, whenever a vendor submits an invoice for approval, the procurement management software will process the invoice, digitize it, and cross-check it with information available in its database.

3. Purchase Requisition Creating a purchase requisition system gives the requester a step-by-step experience. The software embeds the purchasing policy in the process itself and helps the requisition requester in the right way.

4. Vendor Management – Manually checking every vendor is often a repetitive and lengthy process. A procurement management software like analytics can help smooth things out by automating several tasks in this process, like case follow-ups, background checks, and reviewing supplier RFQ.

5. Contract Approval – Just like approving invoices, contract approval can take weeks, even months depending on whose approval you need to get! With an automated procurement management software, the automated system will simply review the contracts, compare them against pre-defined templates, and then point out what needs changing in the document’s terms and conditions. Try doing those tasks manually and you’ll just end up wasting a lot of time!

The Benefits of Digitizing Your Procurement Management Plan

If you’ve already digitized your procurement management plan, then that’s great. You’re probably already enjoying the benefits of having a dependable automated system assisting you with the procurement process. Some of the benefits include the following:

1. There is an improvement in vendor management. Because your procurement management plan has an automated system that takes care of choosing and selecting potential vendors for you, you now have several options open for you. Your automated program can also verify if the vendor is reliable or not based on your system’s records.

2. Better compliance is observed with procurement process metrics. Your procurement planning software is not just automating processes for you, it is also using the metrics that you’ve placed in its system. The procurement software can compile all important and relevant information in an easy-to-follow dashboard. Therefore, it gives you full control of how each procurement process is tackled by your system and you are always confident that your company is always following the right metrics for procurement at all times because of the automated system.

3. Your company is saving time with automated processes. While not everything in your current procurement process is running automated, you are still saving time and effort because almost half of the work is now being run by your procurement management software. Your company can greatly benefit from paperless approval because all documents that are related to the procurement process are now scanned and saved digitally for your reference and safekeeping.

4. Your company’s business spending is in greater control. The biggest issue with paper-run procurement management is budget control. Complicated budget spreadsheets are very hard to translate and store, which is why companies that insist on using paper are always having issues with spending too much money over their purchase spending. With an automated system, the program itself will analyze and monitor budget limits that were set by the procurement manager. Not only that, but the system can also produce reports based on your latest procurement spending. This will give you an idea of how much of your budget you should set for your next transactions!

5. You get valuable reporting features at the end of each procurement process. Once the whole procurement is done, you can check your system for an updated report. There you can look at each insight and set your procurement management plan next time with some adjustments.

Conclusion

In the era of digital advancement, procurement management undergoes a transformative shift from traditional paper-based practices to a streamlined, automated process.

The challenges of chaotic procurement management, often rooted in manual and paper-intensive approaches, are being overcome with the integration of sophisticated procurement software.

Embracing digitization not only addresses these challenges but also enhances vendor management, ensures compliance with metrics, saves time, brings spending under control, and provides valuable reporting features for continuous improvement.

Frequentlyasked questions

What is procurement management?

Procurement management means how to go about your company’s spending budget on a tactical level.

How to manage procurement?

To manage procurement, the procurement manager can make use of the digital software programs made available for procurement. This makes managing the procurement budget more feasible.

Why is digitizing procurement essential for vendor management?

Digitization provides a systematic and reliable approach to selecting and managing vendors, expanding options and improving overall relationships through enhanced verification processes.

About the author

My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.

Marijn Overvest Procurement Tactics