Enhancing Transparency with Procurement Software

Inefficiencies of traditional procurement have been bothering organizations for years. Procurement automation technologies were invented to address the challenges of manual processes. Currently, more companies keep switching to digital procurement. According to a PWC survey, companies globally aim to achieve 70% of digitized procurement processes by 2027. 

Automated procurement allows organizations to use technology and tools to streamline traditional procurement processes. It takes the process to a new level in terms of efficiency, scalability, and transparency. 

This guide will explore everything regarding procurement software solutions, from what these are to procurement software’s effects on enhanced transparency and accountability within the organization. Let’s dive into it. 

What is Procurement Software? 

Procurement software is software designed to automate procurement processes within the organization, allowing centralized procurement management. 

Procurement software comes in handy with a variety of built-in tools allowing for fast sourcing, vendor relationship management, invoicing and contract management, inventory tracking, and process automation. 

These systems focus on providing convenience and increasing efficiency. For instance, a centralized tool for procurement management enhances transparency, allowing the tracking of every aspect of the procurement process and minimizing fraud risks. 

Benefits of Procurement Software Solutions 

By leveraging the power of procurement software, you will gain multiple benefits ranging from enhanced transparency to improved operational efficiency. 

Higher Employee Motivation Levels

Automation allows employees to spend less time on repetitive tasks and instead focus on more strategic business activities. This contributes to higher motivation and productivity levels within the teams. 

For instance, instead of filling in the PO details manually, employees can negotiate better deals with the supplies. In the long run, both activities are critical for the business, but unlike the second one, the first one can be automated for time savings. 

Improved Employee Accountability Levels

Software solution increases transparency and allows tracking of every aspect of procurement. This keeps everyone on track and accountable for their actions, contributing to increased accountability levels within the team. 

Cost-Saving Opportunities

With improved visibility and analytics tools, you will be able to identify cost-reduction areas. It will help create an actionable plan that contributes to high-cost savings. 

Improved Collaboration and Communication 

E-procurement tools, such as instant messaging capabilities, provide improved real-time communication. These help to collaborate with the suppliers more efficiently and negotiate better deals by improving relationships with the vendors. 

Improved Decision-Making 

All the available data and reports contribute to data-driven decision-making. 

Thus, e-procurement solutions allow organizations to track and evaluate the performance of different aspects of their operations before making critical business decisions.

How Procurement Software Solution Enhance Transparency and Accountability? 

Procurement software solutions enhance transparency and accountability in multiple ways. To understand how it happens, let’s overview the factors contributing to each in more detail. 

The Role of E-Procurement Solutions in Enhancing Transparency 

The number one benefit of procurement software is improved transparency. Digital procurement solutions contribute to enhanced transparency by providing tools for real-time analytics, procurement activity tracking, and supplier performance tracking. 

Real-Time Data Analytics 

Data analytics in procurement software allows data collection to gain business insights and make informed business decisions. Real-time data analytics and updates help upper management track procurement activity and results to address any potential risks or shortcomings in a timely manner. 

Procurement data analytics provides organizations with: 

• Enhanced visibility. Data analytics and reports provide a comprehensive view of procurement activities. 
• Spend analysis tools that provide comprehensive business spending data. This further helps to identify patterns and trends. 
• Cost management capabilities. With comprehensive data analytics, organizations will be able to identify areas for cost savings and better manage business spending. 

Audit Trails and Transaction Records 

A transparent procurement process provides organizations with historical data regarding audit trails, transaction records, and others. 

This data can help organizations to ensure smooth procurement and prevent fraudulent activity. 

Supplier Performance Tracking Tools

One more way procurement software helps enhance transparency is by providing supplier tracking tools. With good vendor management software, you will be able to gain information on vendor details, documentation, and overall supplier performance. 

To save time, performance tracking can also be automated. 

Collaboration and Communication Tools 

Procurement software solutions that offer collaboration and communication capabilities enhance transparency even further. Communication tools help to streamline and document communication between the teams and suppliers. This contributes to the improved trust factor, better relationships with suppliers, prevention of fraud, and establishment of transparent communication channels. 

Example 

Also, let’s review a theoretical example of the role of procurement solutions in enhancing transparency. 

Company Y does not use an e-procurement solution. The employees manage data via Excel sheets and oftentimes data gets lost. This leads to a lack of transparency and analytics to make informed business decisions. Company Y fails to forecast trends and efficiently meet demand. 

However, there is another company - Company X. This company leveraged the power of procurement software to enhance transparency within the organization. It allows Company X to gain robust insights into different procurement areas. Thus, it is able to efficiently forecast trends, meet demand, and manage different aspects of procurement to maximize ROI.

The Role of E-Procurement Solutions in Enhancing Accountability 

Digital procurement solutions contribute to enhanced accountability within the team. 

Compliance Tracking Tools 

Procurement compliance is about making sure the procurement team and vendors are properly following the guidelines and policies regarding the procurement process. 

In fact, increased transparency and tracking features allow organizations to enhance compliance tracking capabilities. Thus, businesses utilizing procurement software have greater access and visibility into the processes from contract management to supplier tracking. 

The improved visibility and compliance tracking features contribute to higher levels of accountability among the suppliers and the procurement team. 

User Access and Role-based Permissions 

Procurement software allows you to assign specific user roles and responsibilities. Thus, you can manage user access and restrict them from performing certain actions based on their responsibilities. 

For instance, you can set permissions that do not allow anyone besides the person responsible for purchasing to approve and process the payment. This was a simple example, as the real process is a bit more complex. 

To manage user access and ensure smooth procurement, you can create approval workflows. Every stage of the approval process will be reviewed and approved by the responsible person/team. 

The well-defined roles and permissions increase accountability among the team members. 

Reporting Tools 

Reporting and analytics tools within procurement software allow for fraud detection. This decreases risks associated with fraud and additional expenses such as duplicate payments. 

Most common procurement risks are associated with the following: 

• Supply chain disruptions.  
• Poor supplier selection.  
• Unorganized supplier relationship management.  
• Ineffective contract management. 

All of these risks are the result of inefficient performance due to a lack of accountability. However, if you incorporate procurement software that provides comprehensive reports and analytics, it will directly impact the accountability levels of the employees. Higher accountability will help to mitigate risks associated with low-level performance. 

Example

To better illustrate the points above, let’s review an example of the role of procurement software in increasing accountability. 

For instance, let’s review this scenario. Company Y does not use procurement software and instead sticks to traditional procurement. The data is decentralized, and employee actions are almost impossible to track. Employees in company Y are less accountable for their actions and often fail to recognize duplicate invoices or properly manage supplier relationships. All of this leads to Company Y losing resources. 

On the other hand, there is Company X. Company X uses procurement management software for increased efficiency. Employees in Company X are aware that the processes are transparent and actions can be easily tracked down. This keeps them on track, improving accountability levels within the organization. 

When to Consider Using Procurement Software?

You should consider using the procurement software if your aim is to improve efficiency, and cost savings, and gain greater visibility regarding procurement processes for enhanced transparency. 

Consider using procurement software to automate the following: 

• Purchase requisition and approval processes. 
• Sourcing process to streamline procurement and centralize list of preferred vendors. 
• PO and invoice management with three-way matching for increased accuracy. 
• Contract management to reduce the potential of fraud. 

Key features to look for when choosing procurement software are: 

• Supplier management and collaboration tools. 
• PO, invoice, and contract management tools, alongside three-way-matching capabilities. 
• Collaboration and communication features (e.g., instant messaging). 
• Automation tools to customize and automate approval workflows. 
• Spend analysis and tracking tools. 
• Integration capabilities (e.gf., with accounting systems, such as QuickBooks). 

Enhance Transparency and Accountability within Your Organization Today 

If you are looking for a quality procurement software solution to enhance transparency and accountability, then you are in the right place. Tradogram is an all-in-one procurement tool that offers every feature necessary for better procurement management. 

The platform comes in handy with features ranging from inventory and supplier management to robust data analytics and tracking tools. To find out more about how we can help you enhance transparency and accountability while maximizing ROI, schedule a free demo with us.