Improving Procurement Efficiency with Workflow Automation

In recent years, workflow automation has become a critical tool for businesses seeking to streamline processes and enhance return on investment (ROI). Procurement, a vital function of modern organizations, involves multiple complex stages. By automating procurement workflows, businesses can increase operational efficiency, reduce manual errors, and achieve better results than traditional manual processes.

In this comprehensive guide, we’ll cover everything you need to know about automating procurement workflows to boost efficiency. From understanding workflow automation to exploring its benefits and offering practical tips, we’ll show you how to optimize your procurement operations. Ready to dive in? Let’s get started.

What is a Workflow? 

A workflow is a structured series of steps designed to complete a specific process. Think of the process as the "what" you need to accomplish, and the workflow as the "how" — the tool enabling you to efficiently complete that process. A key feature of workflows is their repetitiveness, meaning the steps to complete a task are carried out the same way each time.

What is a Workflow Automation? 

Workflow automation refers to using software solutions to perform the activities involved in workflows. This automation eliminates manual tasks, reduces human error, and speeds up operations. Automating workflows in procurement can lead to significant improvements in efficiency, accuracy, and control over the entire procurement process.

Let’s explore a few common examples of automated workflows in procurement:

• Purchase Order (PO) Processing: Automating the purchase order process — from material requisition submission to approval and PO creation — reduces delays and minimizes errors.
• Automated Data Entry: Automating data entry for procurement documents improves accuracy and saves time.
• Automated PO Placement: Setting up thresholds to automatically place POs when inventory levels drop below a specific point ensures timely procurement.
• Automated Notifications: Setting automated alerts when approvals are needed helps avoid bottlenecks and keeps the process moving smoothly.

Benefits of Automated Workflows 

Automating procurement workflows will provide your organization with various benefits, including enhanced accuracy and speed. So, let’s review everything in more detail. 

Risk Mitigation and Accuracy:

One of the main benefits of automated workflows is that they allow for mitigating risks and acquiring a higher level of accuracy. By automating manual processes, companies eliminate the possibility of human error, ensuring streamlined operations. 

Enhanced Operational Efficiency:

Enhanced operational efficiency is yet another benefit that automating workflows in your organization will equip you with. By automating repetitive processes, organizations can save time, reduce human error, and enhance operational efficiency, allowing teams to focus on more strategic activities. 

Increased Control and Visibility:

Automated workflows require the use of automation software, which allows you to gain increased control and visibility. First, you gain access to real-time monitoring capabilities, which allow you to see where each task stands and how efficient the process is. 

Faster Operations:

Automated workflows can process tasks instantly, speeding up operations and overall cycle time. By automating different workflows within your organization, you can eliminate bottlenecks and reduce the need for human intervention.

How to Automate Procurement Workflows in 5 steps? 

To implement automation successfully, you must first understand how each step impacts the final outcome. The best strategy is to automate your existing procurement processes. Let’s explore some key steps to follow when automating workflows:

1. Map Your Current Procurement Process 

The first step toward successful workflow automation is to map your current procurement processes. Currently, you are following a specific process/workflow. Even though it is yet manual, it is still important to define. So, make sure to break down each stage of the process, outline responsible employees for each step, and note dependencies between tasks. 

Once you have mapped out the current process, you can quickly pinpoint improvement areas. The most challenging parts of manual procurement workflows are errors resulting from manual data entry, time-consuming approval processes, and delays in invoice processing, causing late payments and damaged relationships with the suppliers. 

By mapping out the current process, you can create a list of inefficiencies that automation can solve for your organization. 

2. Identify User Roles and Responsibilities 

When you are clear about the stages involved in the workflow, the next step is to define all actors in it. Each team member must have a specific, well-defined set of responsibilities and tasks. First, this helps to ensure an accurate and streamlined process, and second, it increases accountability among the team members. 

To assign user roles and responsibilities, first define roles within the team, e.g., one is responsible for initiating tasks, the other for approving decisions, the third for completing actions, and so on. Then, assign task ownership to specific individuals to track activities and ensure compliance. Finally, an approval hierarchy should be set, identifying who has the authority to approve or escalate decisions. 

3. Set Clear Objectives for Automation 

Your goals for workflow automation should be specific, measurable, achievable, relevant, and time-bound (SMART). For example, instead of the broad goal of “improving invoice processing time,” a SMART objective would be to “reduce time spent on invoice data entry, approval, and matching by 60-70%.”

4. Choose the Right Automation Technology 

Choosing the right technology is one of the critical factors affecting the success of your workflow automation. Think about it: If you choose a low-quality software solution with a bad user interface and almost no customization options, how are you going to make the life of your team easier, as well as your procurement strategies? Now, instead of spending time on manual workflow, your team will spend the same amount of time trying to understand how the software works and how to create a workflow. 

The “scenario” earlier illustrates how low-quality software solutions will make the job even more “difficult” than manual processes. Thus, it is vital to choose the right tool. A good software solution must offer features and benefits such as: 

• Robust automation capabilities to automate and streamline procurement workflows with ease and precision
• A good user interface to ensure ease of use and fast onboarding of the employees. 
• Scalability. To ensure good scalability, navigate toward cloud-based solutions. Cloud-based solutions offer scalability to fit both small and large organizations and adjust based on demand. 
• Integration capabilities. The software of your choice must integrate with existing tools and systems to ensure smooth processes, such as tools like QuickBooks and NetSuite. 
• Compliance & Audit Trail. Look for solutions that offer strong compliance management and provide a complete audit trail of procurement activities. 

If you are navigating more toward full-featured procurement solutions that also offer automation and customizable workflows, then we recommend looking at Tradogram. It also provides features for inventory, supplier, and contract management. 

5. Build and Implement the Workflow 

When you are clear on the current processes and automation goals, it is time to build the workflow, assuming you have used our advice to find a good software solution. 

Start by importing necessary data into the new tool and move on to setting up the automation. For instance, you can start by automating purchase requisition processes. The workflow trigger will be an employee/department requesting a product/service via a predefined form. 

Then, the workflow should lead to an approval stage where the relevant department will approve the need, after which the route will be taken to budget check. If everything in these stages is approved, the workflow will move to the procurement department, where the team can review the requisition, approve, and place a PO. 

The purchase order can be another workflow that will go through the approval process and then move to the dispatch stage. Vendors receiving the request will acknowledge the PO, confirm the receipt, and deliver the goods. Once the invoice matching and payment stages are completed, the final stage will be PO closure. 

This workflow without automation requires lots of time, but automation ensures a smooth and streamlined process with no errors. 

Other workflows you can set up and automate with the right tool include a request for Proposal (RFP) workflow, Invoice Processing Workflow, and Contract Management Workflow. 

Improve Procurement Efficiency with Tradogram 

If you’re looking to enhance procurement efficiency, Tradogram is the perfect solution. Tradogram’s procurement workflow automation tools streamline purchasing processes, enable strategic sourcing, and efficiently manage suppliers. With features like customizable workflows, real-time monitoring, and powerful analytics, Tradogram helps organizations optimize their procurement strategies and maximize ROI.

Contact us today to learn more about how Tradogram can automate your procurement workflows and drive your business toward operational excellence.