Is it possible to optimize a company’s expenses without hiring new employees or investing heavily in IT? Is there a way to make procurement processes like supplier onboarding, contract reviews, and document sharing seamless and streamlined? Can we avoid costly invoice processing and manual data entry errors? The solution is, yes, you can, and procurement automation is key to all of these things. It is backed by the underlying 5 procurement rights of “Right Quality, Right Quantity, Right Place, Right Time, and Right Price .”
What is Procurement Automation?
Procurement automation is the process of automating manual, repeatable steps, and labor-intensive tasks in the procurement process and reduce the time it takes. Procurement automation software allows you to expertise in critical business activities such as decision-making and strategy development. Transform the purchase process to payment while keeping the value low.
Why do you have to automate your procurement process?
- Maximize productivity
- Remove manual errors
- Provides transparency into your spend
- Acts as a centralized repository
- Improves collaboration between internal and external teams
- Eliminates approval bottlenecks
1. Inherent Risk Tiering
Determining the risk inherent in your supplier relationships is often one of the most important activities in the supplier risk management process to understand how that supplier is assessed and managed. If this risk ranking process is subjective, you will find that your suppliers fatigue inconsistently. If the method is manual, you are wasting valuable time assigning risk levels when automation might be on the way for you.
Vendor risk management systems allow you to create a standard for the built-in risk assessment process and simultaneously create automation. For example, if you are using a points-based question-and-answer risk assessment, you will have point thresholds in your system to automatically assign an inherent risk level that is supported by the final assessment score. Better yet, you can set up logic that automatically triggers a certain level of inherent risk supported by a solution to a question (i.e. each time a provider has access to PHI, Protected Health Information will automatically trigger “High Risk”).
2. Due Diligence Scoping
Many companies do not have a good way to analyze their due diligence questionnaires. Scope means that the questionnaire is adjusted based on the particular supplier being evaluated (that is, you would not send your landscaping supplier an information security questionnaire with 300 questions).
With the Bestinclass Vendor Management System, you can define the flow of work that automate the launch of certain questionnaires. For example, let’s say your company runs three different vendor questionnaires: 1) a business health assessment, 2) an information security assessment, and 3) a business continuity assessment. Automation would allow you to implement rules such as “Always send our business continuity assessment to any vendor that is classified as” critical. ”
3. Vendor Response Evaluation
The process of evaluating supplier responses to due diligence questionnaires could also be one of the most time-consuming activities related to supplier management. But not anymore! Enriching your questionnaires and sending only the questions they have to vendors (# 2 above) and automating the evaluation process will save you valuable time.
Best-in-class vendor Management Systems allow you to configure “preferred answers” in your questionnaires. This suggests that when a vendor submits a questionnaire, you can quickly determine whether or not the vendor’s response to each question matches how you want to answer those questions. Some systems go one step further in this automation process, automatically associating pre-defined risks with questions that do not meet your company’s response standards (that is, the preferred response).
4. Purchase Requisition
Most of the time, the purchase request process is slowed down and takes a long time to move through the approval ladder of the organization. Automating the procurement process not only shortens the approval cycle time, but it also eliminates redundant steps in the process and enables purchasing staff to do more in less time and more efficiently.
5. Continuous Monitoring of Vendors
Continuous monitoring is vital to effectively managing vendor relationships. Your work as a vendor risk manager doesn’t stop once the initial due diligence of a vendor has been completed. You would like to continuously monitor your vendors to spot if any new risks present themselves.
Automation can make this a way more efficient and manageable process. There are a variety of online tools out there, like Argos Risk or Prevalent, that constantly scan for emerging threats that you simply might not remember. For instance, you’ll configure these sorts of systems to send you automatic alerts when certain events occur which will increase your organization’s risk exposure (such as alerts on a vendor’s declining economic condition, lawsuits the seller is involved in, data breaches, etc.). Working these sorts of automated alerts into your overall vendor risk management process drastically improves your ability to stop risks.
Automation is not any longer something that’s only available to extremely large organizations with even larger budgets. You should begin automating your vendor risk management process today. Use the ideas present in this article to start your automation journey with Vendor Portals from Sciqus!!