Procurement: sophistication, traceability and mobility
Posted: Thu Dec 26, 2024 4:49 am
The terms purchasing process and procurement are often used interchangeably. There is indeed a relationship between the two processes, but in reality they are quite different. Let's understand what unites them and what separates them.
The difference between the purchasing process and Procurement
The purchasing process should be understood as the set of actions directly involved in the act of acquiring materials or services. It includes operations such as preparing the order, possibly subject to approval, receiving goods or raw materials and registering and checking suppliers' invoices.
The term Procurement encompasses the entire strategic and operational component of managing a company's supply process, starting upstream and ending downstream in the purchasing process. Procurement encompasses kenya whatsapp number database research, supplier evaluation, price and contract negotiation , as well as the entire financial component involved. This process includes a vast, integrated and sequential set of operations that interconnect all internal and external stakeholders within the organization, which is why systematized Procurement solutions are beginning to appear on the market through flows geared towards maximum speed, productivity and profitability of the process.
In simple terms, we can say that the purchasing process is a small piece of the puzzle that represents the entire Procurement cycle in an organization. While this distinction may seem useless in a small company (but it is not), for companies with more complex processes it is absolutely essential to understand the difference between the two concepts and implement a true Procurement strategy to achieve greater process efficiency and maximize the effectiveness of the entire supply chain. After all, purchasing well is one of the classic drivers of business success.
What is the impact of poorly structured purchasing processes?
Despite the technological advances we have seen in recent times, the procurement process is still the Achilles heel of many companies today. To quickly reach this conclusion, we only need to think about the number of manual operations that continue to exist in companies.
Scenarios such as requesting a quote by email or over the phone continue to be a reality in the vast majority of organizations, causing tremendous disorganization, especially when there is a need to go back in time to access historical context information. This is where chaos arises.
Approvals in the hallway or over the phone are another example of a lack of rigor and efficiency, especially since it is essential to ensure traceability and historical analysis throughout the entire process.
Worse than that, is the loss of profitability that is being missed by those responsible for these operations! Manual management of these processes leads to several problems, including:
• Slowness of operations
• Propensity for errors in orders
• Difficulty in optimizing costs
• Tendency for errors due to failure or excess stock
• Lack of traceability and control of history
Main advantages of implementing a Procurement process
1. Increased productivity
The first major advantage resulting from implementing an efficient Procurement process is, without a doubt, productivity. All operations involved in the process are automated, freeing up the team for other, more strategic operations that truly help the company thrive.
2. Greater agility in executing operations
Today, it is no longer necessary to wait until the next day, when you return to the office, to approve a purchase or settle an invoice. There are online Procurement solutions through which you can carry out operations from anywhere, with the great advantage of immediate integration into the business management system, or ERP. This agility is essential when we are used to carrying out tasks that should be done “yesterday”.
3. Real-time contact with suppliers
Agility in the relationship with the supplier is also an important aspect, that is, the possibility of finding suppliers that meet existing needs, providing greater fluidity in the entire process. When there is a well-structured Procurement process, suppliers can make their quotations online, allowing the "buyer" to more easily find the best cost-quality-benefit ratio.
4. Traceability throughout the entire process
The standardization of processes, combined with their control and traceability, are fundamental premises for efficient logistics management.
In addition to speeding up operations and ensuring accurate information, this systematization ensures traceability throughout the entire purchasing cycle, from the request to the settlement of the invoice. It also ensures compliance with operational and contractual rules, without any administrative work or errors in the information.
At a time when the watchword is digitalization, this reflection on the need to structure true Procurement processes makes even more sense.
And if we think about the challenge that has been set for us all to eliminate the use of paper, wouldn't it make sense to include logistics operations in this goal as well? Why hasn't this happened yet?
The difference between the purchasing process and Procurement
The purchasing process should be understood as the set of actions directly involved in the act of acquiring materials or services. It includes operations such as preparing the order, possibly subject to approval, receiving goods or raw materials and registering and checking suppliers' invoices.
The term Procurement encompasses the entire strategic and operational component of managing a company's supply process, starting upstream and ending downstream in the purchasing process. Procurement encompasses kenya whatsapp number database research, supplier evaluation, price and contract negotiation , as well as the entire financial component involved. This process includes a vast, integrated and sequential set of operations that interconnect all internal and external stakeholders within the organization, which is why systematized Procurement solutions are beginning to appear on the market through flows geared towards maximum speed, productivity and profitability of the process.
In simple terms, we can say that the purchasing process is a small piece of the puzzle that represents the entire Procurement cycle in an organization. While this distinction may seem useless in a small company (but it is not), for companies with more complex processes it is absolutely essential to understand the difference between the two concepts and implement a true Procurement strategy to achieve greater process efficiency and maximize the effectiveness of the entire supply chain. After all, purchasing well is one of the classic drivers of business success.
What is the impact of poorly structured purchasing processes?
Despite the technological advances we have seen in recent times, the procurement process is still the Achilles heel of many companies today. To quickly reach this conclusion, we only need to think about the number of manual operations that continue to exist in companies.
Scenarios such as requesting a quote by email or over the phone continue to be a reality in the vast majority of organizations, causing tremendous disorganization, especially when there is a need to go back in time to access historical context information. This is where chaos arises.
Approvals in the hallway or over the phone are another example of a lack of rigor and efficiency, especially since it is essential to ensure traceability and historical analysis throughout the entire process.
Worse than that, is the loss of profitability that is being missed by those responsible for these operations! Manual management of these processes leads to several problems, including:
• Slowness of operations
• Propensity for errors in orders
• Difficulty in optimizing costs
• Tendency for errors due to failure or excess stock
• Lack of traceability and control of history
Main advantages of implementing a Procurement process
1. Increased productivity
The first major advantage resulting from implementing an efficient Procurement process is, without a doubt, productivity. All operations involved in the process are automated, freeing up the team for other, more strategic operations that truly help the company thrive.
2. Greater agility in executing operations
Today, it is no longer necessary to wait until the next day, when you return to the office, to approve a purchase or settle an invoice. There are online Procurement solutions through which you can carry out operations from anywhere, with the great advantage of immediate integration into the business management system, or ERP. This agility is essential when we are used to carrying out tasks that should be done “yesterday”.
3. Real-time contact with suppliers
Agility in the relationship with the supplier is also an important aspect, that is, the possibility of finding suppliers that meet existing needs, providing greater fluidity in the entire process. When there is a well-structured Procurement process, suppliers can make their quotations online, allowing the "buyer" to more easily find the best cost-quality-benefit ratio.
4. Traceability throughout the entire process
The standardization of processes, combined with their control and traceability, are fundamental premises for efficient logistics management.
In addition to speeding up operations and ensuring accurate information, this systematization ensures traceability throughout the entire purchasing cycle, from the request to the settlement of the invoice. It also ensures compliance with operational and contractual rules, without any administrative work or errors in the information.
At a time when the watchword is digitalization, this reflection on the need to structure true Procurement processes makes even more sense.
And if we think about the challenge that has been set for us all to eliminate the use of paper, wouldn't it make sense to include logistics operations in this goal as well? Why hasn't this happened yet?