Top 5 Benefits of a Cloud-Based Procurement Solution
Cloud automation is an inevitable change of the modern business world and the global pandemic further accelerated the adoption of it. The global crisis has put the procurement function in the spotlight and companies are looking towards their procurement teams to drive value beyond cost savings. Procurement teams must consider adopting cloud procurement to eliminate inefficiencies and streamline the procurement process end-to-end.
What is Cloud Procurement?
Cloud-based procurement allows for an effective and streamlined system that automates the procurement function and helps you to drive cost savings, select the best suppliers, enforce compliance, and mitigate supplier risk. The cloud provides the ability to store and access data anytime and from anywhere via the internet, whilst the cloud procurement digitalises the procurement data and automates the procure-to-pay process. Cloud-based procurement software then automates procurement tasks such as data entry, spend analysis, supplier selection, and project tracking.
The Need For Cloud Procurement
Conventional procurement functions depend upon complex legacy systems and manual handling of transactions that waste the valuable time of the procurement team that could otherwise be used for creative, value-enhancing strategies and solutions.
With cloud-based procurement solutions, you can use cloud storage to securely store all your purchasing data for easy and instant access. On top of this, procurement automation eliminates the room for error on critical tasks such as purchase orders, delivery schedules, and approved budgets.
Visibility and accessibility to spend data provided by the cloud-based procurement software go well beyond the scope of the procurement team. They are also helpful for all decision-makers of the enterprise.
Let's look at the top five benefits of cloud-based procurement solutions for businesses today!
5. Cost Savings
Procurement automation provides an overview of the procurement team's operations and even identifies saving opportunities. It offers visibility into your historical spend and helps managers make well-informed decisions. Cloud-based procurement solutions enable you to conduct a spend analysis that helps identify and eliminate maverick spend. Cloud-based procurement streamlines the entire process and provides visibility to ensure that you're purchasing from authorised suppliers only and leveraging contract discounts.
Another way cloud procurement drives cost saving is by reducing employee costs, which are a significant component of the cost structure of most businesses. According to The Hackett Group, procurement automation reduces employee costs by 21%.
4. Ease of Use and Accessibility
Procurement solutions are easy to use and therefore enhance employee compliance and adoption. The process of adopting this type of procurement software is smooth and requires no extensive user training. Companies can use it to meet evolving market demands rapidly without needing a costly upgrade. The software provides the necessary room for growth and seamlessly integrates with the business without requiring any shifts and upgrades.
The ease of use also eliminates maverick spend as the software automates purchasing from authorised suppliers entirely. Consequently, making off-contract purchases seem arduous and unnecessary.
3. Spend Visibility and Control
Cloud procurement software analyses spend data by supplier and category and provide item-level visibility across the entire organisation. That provides the company with the necessary control over its spending, helps identify savings opportunities, rationalises the supply chain, and maximises the value-driven from each supplier contract.
The procurement cloud software provides visibility reports that are easy to interpret and help improve decision-making and strategic planning.
2. Improve Efficiency
The procurement process consists of time-consuming but low-value tasks such as routing requisitions for approval, manually matching, routing, approving invoices, and rekeying invoices from one system to another. Successful modern businesses identify humans as the most valuable resource. The current notion is that human resources should be used for solving complex problems and devising strategies instead of wasting them in performing easily automatable tasks.
Cloud procurement software automates all these repetitive tasks that bring about a two-fold increase in efficiency. One, by empowering employees to work smarter and more strategically, and two, by enhancing the speed and accuracy of procurement tasks.
Consider the example of purchase requisitions, which are time-consuming and challenging to move in the complex hierarchical system using conventional procurement methods. Procurement automation removes the redundant steps and cuts down the approval cycle, allowing the purchasing team to do more in less time.
Similarly, cloud procurement software improves the delivery time of purchases by two days on average.
Cloud procurement software enhances process efficiency by helping businesses spot process gaps and fixes them smoothly.
1. Seamless Integration
Lack of visibility between departments and poor inter-department communication are two significant challenges that can now be solved efficiently using cloud procurement solutions. The software seamlessly integrates all sourcing processes and provides a single source of the truth accessible to all departments.
Cloud procurement eliminates the cost and time required to integrate modules. It provides a seamless user experience, where users can access all procurement information in a single platform and shift fluidly between different tasks. This end-to-end integration capability offered by cloud procurement software eliminates the room for errors, data redundancy, and manual intervention.
Benefits of a Cloud-Based Procurement Solution:
This solution streamlines the entire procurement process to drive cost savings, save valuable time for employees, and improve overall efficiency. According to research, procurement automation reduces the cost of purchase order processing by up to 75%.
With these benefits, it is easy to see why businesses must opt for cloud procurement solutions to drive value beyond cost savings. Cloud procurement enables transparent accessibility to spend data by all employees anytime and from anywhere. This feature has significantly amplified cloud procurement adoption during the pandemic, as businesses are looking for ways to stay profitable in the new normal and recover from disrupted supply chains.
Procurement automation was already an inevitable change that has only accelerated further during the last two years. You must automate your procurement function using the best cloud procurement software and avoid getting left in the dust by competitors.
About the Author:
Mohammed Kafil is a certified procurement consultant who has been coaching companies to establish resilient digital procurement operating models for over a decade now. With Kissflow Procurement Cloud, a flexible procurement software that streamlines end-to-end procure-to-pay, and eventually the vendor management process, Kafil helps medium and large enterprises with their digital transformation projects.