Stop me if you’ve heard this before. But a good procurement solution is critical to the success of the entire organisation. For not only does such a procurement solution reduce your costs and allow you to optimise your supply chain, it also gives you a long-term and accurate view of pending financial liabilities.
A good solution will allow you to record all the expenses against identified assets on an ongoing basis. This permits reports to be generated that show the life-cost of assets.
Today’s procurement solution should be web-based so that it can be easily accessed from anywhere and not just the office. This also prevents the need to buy and install software and hardware.
It should also be easy for the staff to use.. They should be able to select from pull-down menus and be given guidance as they raise purchase orders and also have access other higher level functions such as being able to clone previous orders to generate a new purchase order number.
Once the purchase order is raised, staff should be able to email, print, fax or simply provide details over the telephone.
Those reports I mentioned?
They should permit reports that show the value of purchase orders raised that have not been invoiced (pending liability) and a list of purchase orders still open that are older than a certain number of days. (They may never be issued and may need to be cancelled in order to prevent incorrect reporting of pending liability.)
The list of suppliers should link to your master vendor list so staff can only select approved vendors. New vendors are then added by a controlled management process preventing unnecessary duplication of suppliers and optimizing purchasing power.
Integrating into the workflow
Most importantly the solution you choose should integrate order approvals into the workflow before a purchase order can be released. It should adjust the workflow according to the value and type of purchase and according to business policy, i.e. the business rules. For example, a purchase order for an IT product should go to that department for approval and to the person who can authorize the amount about to be spent.
The solution should link to or include the invoice processing system so that invoices received without purchase orders can be sent back to the vendor. The vendor can then resubmit the invoice with the number through the procurement solution portal. This automatic rejection combined with ease of correction motivates vendors to ask for a purchase order number whenever they receive an order.
Finally, make sure the procurement solution you select allows for automatic updates if you update your financial software.
All that may be a lot to ask of a single solution. But insisting on everything is the way to make sure you’ll end up with one that truly benefits your organisation.