Today’s Public Procurement teams are responsible for solicitations, building RFPs, choosing the right vendors, maintaining vendor relationships, ensuring internal and external compliance, and ensuring spend is within budget.
Such additional responsibilities are proving a struggle for agencies due to a lack of automated processes, reduced workforce and more demand than ever to do more with less. Traditional, manual processes rely heavily on paper or email for solicitations and purchasing and these processes are time-consuming and prone to errors.
However, Procurement teams can overcome these challenges by:
1. Making it easy for vendors to do business with you
With Procurement teams becoming more and more digital, they also need to digitalize their most valued relationship – the one with vendors. Manual processes for onboarding and interacting with vendors are costly and time consuming.
Onboarding new vendors can be done through cloud-based solutions instead of paper applications where data is manually routed through the agency and entered into the ERP system or worse, onto a spreadsheet. Interacting with vendors can, and should, be done within a single platform where communication and collaboration can be tracked and audited. You also want them to be able to easily view open solicitations and be notified of newly created solicitations.
2. Eliminating paper RFP responses
Over the past few years, and most recently with the pandemic, gone are the days for vendors to submit their paper RFPs via mail or in person.
Consider the modern RFP process, and how eProcurement solutions reduce the manual effort and increase efficiency by allowing staff to create RFPs from predefined templates, to automate bid creation, to provide online RFP submissions, to increase visibility through Q&A and collaboration with vendors, and to award vendors all in one place. Also think about the increased compliance and transparency!
3. Defining purchasing processes and procedures
Ensure your Finance and Procurement functions are aligned. With manual processes, it’s easy for employees to accidentally spend above their budget, send a requisition to the incorrect approver or allocate cost to the wrong cost center or general ledger. Workflows can be easily implemented and configured to ensure that your spend is allocated to the correct cost center, geography, and general ledger. In addition, you can configure approval workflows to make sure that each requisition is approved by the correct people before a PO is created. Think about it, without proper coding or approvals in place, Finance would be duplicating effort by tracking down approvals, verifying receipt of goods and manually entering the proper coding just to get an invoice paid!
It is important to create a process where users are ‘guided’ through the entire buying process – known as “guided buying”. Automated or digital solutions guide users through the entire process:
- Choosing products and services from only preferred vendors or catalogs.
- Automatically creating a requisition with the correct product details including allocating costs to the correct cost center and General Ledger.
- And, as mentioned previously, approval workflows can be used to ensure that the correct people approve the requisition before a PO is created eliminating the effort once the invoice is already received.
4. Ensuring spend aligns with budget
According to NBER, Federal agencies spend an average of 4.9 times more in the last week of their fiscal year than in a typical week during the rest of the year. Therefore, ensuring that you “use it so you don’t lose it,” and having spend visibility to maximize your spend against budget is crucial for agencies.
With paper-based processes there are no approval workflows and no cost allocation process, meaning limited visibility to what you’re actually spending. The budget you have for the year needs to not only be spent wisely but actually utilized so you don’t forgo any resources or project development for new initiatives.
Visibility into the procurement process allows Procurement leaders to spot inefficiencies and find areas for improvement and development. By implementing a formal PO process, the breadth of visibility will be expanded, with a close eye on budget.
Now is the time to leave behind manual, time-consuming processes in favor of spend management solutions to increase data accuracy, optimize your supplier base, and increase visibility and control over spend.