Procurement may simply be defined as a continuous process that involves sourcing for suitable suppliers, receiving bids, selecting the best option, and finally making purchases. Every step in the procurement process is vital to the operations of a business. It not only affects cost but also determines the efficiency and the overall performance of a company.
How Technology Affects Procurement
Advances in technology have made a significant impact on procurement. Transactions are now transparent and completed in shorter times and at lower costs. Every business is now considering to use a procurement software company to acquire a management system that is tailored to its business operations.
Digitization has eliminated the use of paperwork which has not only reduced procurement expenses but has also increased procurement efficiency. Consider the time it would take to trace an invoice for goods ordered months ago. Even with an efficient filing system, it is still possible that some documents might be misplaced or get damaged. But a procurement software enables the efficient storage, retrieval, and modification of records where necessary. Additionally, it becomes easier to establish data security since access is limited to only authorized employees.
Building Relations with Suppliers
Suppliers play an important role in achieving efficient operations. Suppliers can be the basis of gaining a competitive advantage over competitors. This advantage could be achieved through costing and scheduling.
Often, suppliers offer different prices to their customers. This depends on several factors, among them the nature of their relationship. As the two parties develop a strong business relationship, it is likely that suppliers will begin to offer trade and cash discounts. Additionally, good relationships between suppliers and manufacturers translate to the timely delivery of raw materials.
Manufacturers can then produce their products on time. But sometimes, there are cases of manufacturers who make late payments. As a result, suppliers tend to blacklist them. This could mean a delay in their production plans which could then affect their ability to purchase goods and other supplies.
Shop Wherever You Are
In the past, the majority of businesses acquired their raw materials and other supplies from companies closer in proximity and locale. It was assumed that the physical closeness greatly reduced the cost of the supplies and the time taken for deliveries, which in turn increased production efficiency.
However, over time, businesses have found the assumption to be false. Advancements in both technology and infrastructure may have caused the shift. Businesses can now order their supplies from all over the world and still experience the same or slightly lower cost of production. The globalization of the market has made supply acquisition in many businesses an international affair, and the technology needed for communication and overseeing it has made it all the more common as a business decision.
With procurement seen as a multiple of activities and interactions that could affect the supply chain, manufacturing, and even marketing, it has become essential to establish an efficient system that could automate most of these processes and lessen the likelihood of human error and environmental damage. Embracing technology not only reduces the workload but also helps your business boost its profitability and reach.