Move over the manual procurement process. Procurement software is here to stay.
27 percent of senior executives consider digital transformation as a must have. Additionally, 87 percent of companies think that digital transformation is a competitive opportunity.
And yet only 10% companies globally describe themselves as fully digital. If this number is anything to go by, we can expect lower digital adoption in the packaging industry.
What’s the hold up then? What are the factors impeding businesses to streamline their procurement process with a software?
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In our experience of the packaging industry, some of the frequently stated reasons for limited digital adoption are
- “Getting the team to use a procurement software is cumbersome”
- “Is it worth our time?”
- “How do we know which software fits our requirement?”
- “What are my options?”
And the question we hear the most is,
- “How can I benefit from a procurement software?”
Since we keep hearing this question often, we decided to address it head-on with a detailed post.
The Iceberg Model for Procurement Software
If I were to quickly capture the benefits of a procurement software in an iceberg model, here’s how it would look.
There are some known benefits which procurement managers are constantly looking for. And there is a whole list of unknown benefits hidden beneath the surface. Cumulatively, these benefits can change the face of packaging procurement as you knew it.
Typical Procure to Pay Cycle
Here’s what a typical procure to pay cycle looks like. The process consists of three main activities – procurement, fulfillment, & payment.
You can introduce automation at various steps across the procure to pay cycle using a procurement software
7 Benefits of Implementing a Procurement Software
Let’s deep-dive into how businesses can benefit from procurement software across the value chain.
#1 – Personalized Product Catalogue
Imagine having to buy medicines without having the prescription handy. A personalized catalogue is like that prescription.
Your business has a specific packaging requirement. This requirement has been listed by your packaging expert in a personalized catalogue of a procurement software. You now use that catalogue and seamlessly procure the required packaging without spending too much time or missing out on any item.
Every time there is a new requirement it is appended to your personalized catalogue and the process continues.
What does a personalized catalogue help you achieve? It lays out your required packaging products in front of you.Now, you can place orders without spending time on printed documents or contacting various departments. Besides, this is possible without having to review if you have missed out on anything thus saving you time and resources.
#2 – Reduced Lead Time with Localized Supply
If not planned well, a significant portion of the fulfillment process is spent in the transportation of goods over long distances. This results in increased lead times. This gap can be closed with procurement software.
Software usually encompasses the ability to store and filter data as per your requirement. Using procurement software enables you to aggregate data of sourcing options across locations. You can filter this data and use it to look for localized sourcing options thereby reducing the lead time associated with every delivery.
In this regard, procurement software is like Zomato, just at an enterprise level. It lets you order your products from the closest available sourcing point without extended lead times.
#3 – Efficient Price Benchmarking
Similar to procuring the localized supply of packaging products, procurement software also enables efficient price benchmarking. This is possible due to the ability to aggregate data from various sources.
How does this work?
So you have created a database of sourcing options at various locations. You can arrive at an optimum price point for the packaging you procure by calling for bids from various suppliers. You can then choose the most cost-effective option assuming all the other variables have been agreed upon.
Through this, you’ll be able to optimize allocated budgets without having to cut corners in terms of timely deliveries or quality.
#4 – Managing Multiple SKUs & Delivery Locations
Most procurement managers are tasked with procuring multiple SKUs depending on their requirement. Managing the sourcing of this while ensuring that all the packaging is as per their specification is often clunky. Multiple delivery locations just add to the complexity of managing the procurement process.
For example, Tata Cliq had the mammoth task of delivering 10+ SKUs across 1700+ location in India. Given the scale of the requirement doing a manual process would have resulted in tedious paperwork. Not only that, it would also result in failed deliveries in terms of product, time or quality thus affecting their business.
To address this Tata Cliq used a procurement software that enabled them to streamline the entire procurement process.
Here’s how Tata Cliq Procured Packaging for 1700+ Locations without Breaking a Sweat
#5 – End to End Visibility of Procurement Process
We have seen many executives involved in the procurement process groan inwardly due to the lack of visibility they have on the end to end process.
They have to talk to at least 5 different people and make several calls before they know the status of any activity in the procurement process. These executives would prefer to optimize their procurement process through strategic activities. That’s where a procurement software comes into play. It facilitates the execution of transactional activities using technology, gives visibility, and saves its users a bundle of their time.
Right from the time you have placed the order till the time the payment has been made, every step can be tracked on a procurement software. This also equips procurement teams to intervene in the process if they see it slowing down at any step of the way.
#6 – Data-Driven Analytics and Reporting
As we discussed earlier, you get the added advantage of storing data across various time spans while using procurement software. This data can then be utilized to draw meaningful insights and enable improved processes.
For example, an eCommerce giant we work with was able to identify their average monthly requirement across 200+ locations for their 15+ SKUs. Now by adding a small buffer to this, they were able to stock up based on their ability to forecast their requirement. This, in turn, enabled them to get just in time delivery thus saving on warehousing costs while receiving the required packaging on time?
The advanced level of analytics was made possible with procurement software.
Similarly, reporting helps the team to learn various trends in the procurement process and draw valuable insights from it.
#7 – Simplified Invoicing
Lastly, I can bet there is a tacit sigh every time we talk to procurement managers about invoices. While invoicing is the last step before payment it is one of the most tedious processes. It requires approvals and paperwork which is often time-consuming.
Also, considering the number of orders, keeping track of their status is cumbersome.
That’s where a procurement automation software comes in handy. It allows you to raise, manage, & track invoices without ever missing a deadline or losing time.
Bottom line is digitization is not going anywhere.
So when are you thinking of crafting your own success story in the digital transformation space with a procurement software?3