It’s no secret that procurement is a complicated process to follow. As a result, visibility becomes increasingly cloudy, leading to a greater loss of control, sometimes exacerbated by misunderstandings between the purchasing organizations and the various vendors involved.
Organizations are now moving from traditional, time-consuming procurement processes to a more flexible cloud-based procurement system that lowers organizational costs around the world.
What is cloud-based provisioning?
Cloud-based procurement solutions allow companies to automate every part of the procurement process, from supplier management, purchase requests, and purchase orders for sourcing and invoicing. So the purchasing department can track everything using cloud services.
Compared to on-premise alternatives, cloud-based provisioning software offers many other advantages. These benefits apply to organizations in a variety of industries, including financial services, the Internet, telecommunications, IT services, and healthcare.
Benefits of cloud-based purchasing
Let’s take a look at some of the most important benefits of cloud provisioning:
1. Digitization of paper purchases
A company’s procurement function was typically managed manually, with a heavy reliance on paperwork, phone calls, and in-person conversations. However, manual procurement has hampered a company’s operations and financial success by relying on repetitive, tedious, and time-consuming tasks that failed to deliver significant savings or profits.
Storing thousands of documents – including important contracts, receipts, invoices and other important data – also has high costs which also include other security risks like forgery, theft, etc. With paper-based purchasing, not only is it difficult to manage everything, it also limits organizations’ access to timely and necessary information during the decision-making process.
Streamlining and speeding up all procurement activities by moving procurement processes to a unified digital platform creates chances to drive more value and savings in the procurement process. It also saves the time and labor costs involved in manually processing huge amounts of data.
By automating the process, a cloud-based procurement solution minimizes friction. Remote customers and suppliers have access to documents in electronic format.
2. Accessibility and ease of collaboration
Cloud-based solutions, as opposed to on-premise software options, provide a more collaborative way of working and a smooth flow of information without any boundaries between departments.
Using cloud-based procurement software, you can make information easily accessible and available to approved people, regardless of their location and time. You only need a web browser to access the program and an internet connection. It breaks down silos and encourages employees to do their part, keeping the unified goal in mind.
As it provides real-time information to the whole team, everyone is working with the same version of the data, reducing the risk of errors and inaccuracies.
Expenses can be authorized while the approver is out of the office, reducing delays. In addition, approvals are automatically sent to the department concerned and prioritized by sending reminders and emails.
3. Improved visibility
Thousands of transactions are carried out every day by large companies. It is difficult for businesses to track and manage direct and indirect expenses if they are not properly accounted for.
This software often provides dynamic dashboards that give management more visibility, enabling them to make timely and strategic decisions. In addition, with the help of the audit trail, organizations can easily highlight deviations in the process.
Analytics can be used to clean, improve, categorize, and analyze spend data by vendor and category. This improves item-level visibility across the organization, which is crucial not only for uncovering cost reduction opportunities, but also for maintaining supplier relationships.
Cloud-based sourcing can help you monitor the entire buying cycle. It provides a clear view of who is initiating the purchase of which item, when and why. It also cuts down on the time it takes to complete the procurement process by informing you about the status of the hierarchical approval process as well as sending reminders and emails to the person or department responsible for the delay. On top of that, it also improves visibility into purchase orders, invoicing, and expenses, so you know where your money is going.
4. The power of electronic invoicing
Once an electronic invoice is received from the vendor, it is easier for the accounts payable department to compare it with the receipt slip (GRN) and purchase order (PO). Due to the efficiency of the three-way matching process, supplier payments are processed on time.
Accounts Payable departments can use electronic invoicing to automate validations of invoices before sending them for approval. These checks ensure that all figures, including VAT (GST) calculations, are correct.
They also cross-check invoices with other procurement documents such as contracts and purchase orders. The price on the invoice, for example, must match the price in the agreement. Likewise, item descriptions must match those on the purchase order and receipt of goods.
Additionally, it helps determine which departments are purchasing specific items. Electronic invoicing also allows for faster processing and therefore shorter payment cycles.
5. Leverage technology to overcome policy challenges
When it comes to regulations, procuring entities should exercise caution to avoid red tape.
Rule breakers frequently hamper procurement strategies. Employees sometimes go rogue and make purchases outside of authorized processes because no technology is in place to organize and manage expenses.
Automation can help reduce final expenses by forcing staff to follow a process and stay on a budget. Apart from cataloged items, as a general rule, it will not allow purchases without the approval of the person concerned.
With the help of cloud-based technology, deadlines, especially for approvals, are structured to move faster and more efficiently. As a result, it cuts the time it takes to get hierarchical approval from days to minutes.
Additionally, modern cloud-based procurement software can adapt to unique purchasing standards and business rules. Therefore, you don’t have to worry about compliance.
6. Analysis of expenditure
You can save time by using the built-in reporting tools, including modifying and automating reports when analyzing spend. In addition, spending analysis allows companies to better understand the prices of products and services.
This makes financial tasks easier by making it easier to understand where the money is going, where savings can be made and where value can be added to reduce total expenses and influence the bottom line.
Unauthorized purchases can be prevented by requiring all users to approve purchase requisitions before placing a purchase order. You also have more control over your finances and can see precisely where your money is going.
7. Role of supplier relationship management
Depending on your business, you may have a large number of suppliers throughout your supply chain. Therefore, it is easier to save catalogs and keep track of the suppliers who have the greatest influence on your organization when they are all configured in your procurement system.
You can keep track of the number of orders you place with a supplier management Software so that you can use this information when negotiating a new contract. You can also identify which suppliers are causing problems for your business or which are costly.
It also helps identify suppliers who meet or do not meet your expectations. Knowing which supplier best meets your requirements gives you an advantage in deciding the right time to change them.
When it comes to purchasing software, cloud-based solutions far outweigh traditional methods. This is because cloud services do not require large upfront investments or ongoing maintenance expenses, for example.
In addition, these solutions are convenient, affordable and accessible from anywhere, anytime and on any device.
According to computer economics research, 36% of organizations have implemented some form of software as a service (SaaS) and plan to continue investing, and 44% of organizations are implementing or increasing their investment.
Additionally, a cloud-based procurement system will be the most sought-after technology due to its long list of benefits. Therefore, adoption rates of cloud-based systems are expected to continue to increase in the near future.