Better systems are the key to better results, especially when your organization is on a growth track. A robust procure-to-pay process (P2P) is one of the most beneficial systems to speed progress while retaining visibility into spending. 

But how can you be sure your procurement and purchasing processes are optimized? What does an effective procure-to-pay process look like? How can automation ensure that spending remains under control as you grow?

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We’ll take a detailed look at what goes into a successful purchasing workflow. We’ll also cover some best practices that can tighten up the process. Lastly, we’ll show you how automation can help you keep your procure-to-pay process functioning without breaking a sweat.  

What is procure-to-pay?

P2P is the systematic process an organization uses to identify, request, and pay for the goods, products, and services required to run the business.

Procure-to-pay does not encompass the entire procurement function. It focuses on the purchase, reconciliation, and vendor payment portion of the process. 

Activities such as strategic sourcing, lifecycle evaluations, vendor off/onboarding, and supply chain management fall outside the scope of procure-to-pay. 

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The 9 steps of an effective procure-to-pay process

The benefits of a standardized, repeatable procure-to-pay process in your organization cannot be overstated. 

Having a streamlined workflow in place reduces maverick spending, makes the purchase process faster, improves your order and supplier management, and increases productivity and satisfaction for stakeholders.  

The general flow of the procure-to-pay process is as follows: 

1. Identify a business need: A stakeholder realizes the need for a product or service to perform their job. They may evaluate services or identify the product or materials that work best.
2. Request the item/service: The stakeholder then puts together a requisition or intake form to formally request the purchase of goods. This requisition kicks off the approval and purchase process.
3. Receive requisition approval: The requisition goes through a standard approval process and receives sign-off from all pertinent stakeholders or departments. Finance allocates money for the purchase.
4. Create purchase order: After approval, the relevant stakeholder creates a formal purchase order (PO) to procure the goods. This PO will have all the necessary information for order processing and delivery of goods.
5. Receive purchase order approval: Although the requisition has received approval, the completed PO will ideally undergo a separate evaluation and approval process. This helps reduce errors, clarify requirements, and ensure a smoother purchase and reconciliation process. Once approved, the PO is transmitted to the supplier for fulfillment.
6. Receive the items/materials: The order is fulfilled and delivered by the supplier. The receiving party inspects and evaluates the delivery and checks for accuracy against the order. In cases where the goods don’t match the order or meet quality requirements, the receiver may reject the order.
7. Evaluate vendor performance: Once receipt and reconciliation of goods is complete, a performance review is conducted. This should evaluate aspects of the purchase, including on-time delivery, order accuracy, quality/condition of goods, etc. Any issues can be noted during this evaluation and used during subsequent purchasing decisions.
8. Invoice approval: At this point, a three-way matching process begins to ensure the delivered goods are accurate to the purchase requisition, purchase order, and invoice. Once invoice matching is complete, accounts payable can start invoice processing.
9. Pay the Supplier: This is the final step of the procure-to-pay process. The approved payment is submitted to the supplier based on the purchase order or contract terms. In some cases, timely payment of invoices can help the organization realize benefits such as early payment discounts. 

3 best practices for improving your procure-to-pay process

Improve your business processes, maximize outcomes and make your purchasing and payment functions work better with three highly-impactful best practices.

1. Build a standard approval process for every purchase

Outlining a formal process for requesting and purchasing goods balances your organization's need for oversight and compliance with the need to support your staff and avoid hindering their progress. 

A well-documented procure-to-pay process:

• Creates a frictionless environment where your employees get what they need without uncertainty. It allows staff to remain productive and feel supported in their role.
• Ensures consistent oversight into purchases and adherence to budgets and departmental prerequisites. 
• Reduces risks of ordering from unknown suppliers or making out-of-process, unsanctioned purchases
• It increases visibility, reduces redundancy, and allows finance to track, analyze, and forecast spending 

Your process doesn’t have to be elaborate. It should lay out the path to approval and set expectations for requestors. It should be easy to implement, track, and repeat for every purchase, and enhance the procure-to-pay cycle to ensure continuous improvement of these functions.

At a minimum, your purchase approval process should include: 

• A standard requisition or intake form with all required information spelled out.
• A first point of contact or process owner to begin the requisition and approval. 
• Clearly defined approvers and approval parameters for each purchase. 
• A system to track and document requisitions and orders as they go through the process.
• A post-close process for evaluating purchases, strengthening beneficial supplier relationships, and offboarding vendors at the end of service

2. Outline your contract and departmental requirements

Each approving department in your purchasing process likely has standard requirements for its purchase requisitions. These prerequisites are essential for ensuring high-quality procurement while reducing risk. However, stakeholders and purchasers can only meet these requirements if they know what they are. The specific requirements will be unique to each organization and their individual strategy, but form an important part of the decision-making process and ultimate outcome of the request.

Some examples of possible departmental requirements:

• Internal department lead: Preferred supplier or integration partners based on current tech stack or other partner agreements.
• Legal: specific terms or clauses to enforce adequate contract protections cover to common issues like service-level agreements (SLA), downtime clauses, disaster recovery responsibilities, arbitration, etc.
• Security: Completion of a supplier questionnaire to determine security and risk management thresholds. 
• Finance: Preliminary budget estimate or project milestone report to aid budgeting and forecasting.

To ensure a smooth approval process, document and outline these requirements in one place.

Making departmental requirements part of the intake process helps stakeholders acknowledge and fulfill them before a requisition even enters the pipeline. This reduces friction, avoids purchasing delays, and ensures high quality for every purchase your company makes.

3. Consider automation

As organizations grow, the purchasing process grows exponentially along with them. 

As growth increases, so does contract management for dozens or hundreds of vendors. In a short time-frame, departments begin processing hundreds or thousands of monthly invoices across different locations. In a very short amount of time, your manual procure-to-pay process becomes backlogged and inefficient. 

Rather than continuing to expand the headcount for these operations, consider implementing automation to handle the repetitive and manual tasks in your purchase-to-pay process. 

Using procurement and AP automation can improve the purchasing experience for buyers while reducing the strain on procurement teams and AP departments. In addition, it can free up these important teams to conduct higher-value functions in the organization.

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How does procure-to-pay automation software work?

Procurement software creates a centralized, automated workflow from item selection to invoice payment. 

On the front end, the system automates the purchasing process for buyers through a cloud-based system that centralizes supply orders. Users access a curated catalog of items provided by a database of approved suppliers. 

From there, they can order the goods they need within pre-set system budgets and parameters. This system is dynamic, giving administrators the ability to set spending rules by user, department, category, or location. 

On the back end, procure-to-pay software automates many repetitive and manual processes. Purchases originating from the catalog are routed through an automated approval process. Once approved and delivered, invoices are checked and reconciled within the system, and payment for goods and services are scheduled automatically. 

The system uses AI and machine learning to automatically process thousands of invoices, ensuring they are correctly routed, reconciled, and paid without manual input from workers. 

E-invoicing also enables integrated payments for purchases.

How can procure-to-pay automation help?

Using an automated e-procurement system will improve every stage of your P2P process. By providing a centralized system for all your purchasing, you ensure that organizational requirements are observed while reducing the friction of fulfilling everyday needs. 

With the right P2P solution, you will:

• Ensure adherence to budgets, purchasing guidelines, and approved vendor lists 
• Improve supply chain management when ordering for multiple locations
• Reduce your cost per invoice and invoice exception rates 
• Stabilize and improve cash flow by consolidating invoices and payments
• Help surface cost savings opportunities to improve the bottom line
• Provide real-time, line-level visibility into buying data for better spend management

The value of procure-to-pay software begins with improving productivity for teams and maintaining quality in purchasing. It also has the potential to drastically improve cost savings and reduce waste spending within your organization. 

If you’re ready to learn how automated procurement with Order.co can help you achieve these outcomes, schedule a demo of the platform today. 

Procurement is one of the biggest cost centers in an organization — representing as much as 30-50% of revenue — yet often, support for procurement practices falls behind the investment of other major functions. While many organizations wait until the last possible juncture to implement an automated procurement process, doing this can result in overspending, a lack of transparency in spending, and frustration for accounts payable staff trying to keep up with manual processing. 

The better course of action is to implement a procurement solution before it becomes a problem. Not only can this ease the burden on your stakeholders, but it can also:

1. Power strategic sourcing and better supplier relationships
2. Surface cost savings and improve profitability
3. Stabilize your supply chain and inventory management
4. Automate cumbersome contract management processes
5. Help procurement teams introduce business process improvements

If you’re starting to feel the friction of inefficient manual processes, it’s time to begin the evaluation process. There are an array of solutions out there, each with distinct strengths and advantages, so we’ve curated data on some of the best procurement solutions for growing organizations to help make the selection process easier. These procurement tools are rated by trusted software marketplace G2, and each consistently rates high (above 4 stars) for form and functionality.

Further reading: Learn more about what procurement is and why procurement is important to your business.

Ebook

Choose the Right Procurement Technology With This Decision Matrix

There are A LOT of procurement softwares out there. Make sure you're choosing the right one for your business.

Download the guide

5 Best Procurement Software Solutions

The best procurement software options available today include: 

1. Order.co

This first of its kind Spend Efficiency Platform allows users across departments and locations to order the goods they need from a curated catalog of approved vendors. Order.co is reported as a solid mid-market tool, specifically helpful for organizations that buy for many departments or distributed locations. Order.co improves the procure-to-pay process with full order management, invoice processing, integrated payment, and data reporting functionality. 

Order.co’s G2-verified reviewers are enthusiastic about the ease of ordering through the platform. Features such as dynamic search, past order favorites, and user-based item searches make it easy to get the items you need — whether you’re placing a first-time order or replenishing your most-requested items. 

Pros 

Ease-of-use is consistently mentioned as one of the platform's standout features. Users enjoy having all their preferred vendors in one place in a curated marketplace, which makes purchasing fast and easy. The intuitive UI makes it easy for new users to begin using the product. Quality of customer service also earns consistent praise. The customer support team is reported as highly responsive to questions or support requests such as custom product additions or shipping issues.

Cons

While the UI is user-friendly and stable, some customers report a desire for more robust filtering functionality when searching for products.

2. Planergy

Planergy is a SaaS-based procurement and spend management system that gives businesses more control over their financial operations. The Planergy platform, regarded by users as one of the best options for small business users, helps organizations administer their procure-to-pay cycle and manage inventory effectively. 

Reviewers find Planergy most useful for its extensive integration options. The platform offers easy solutions for linking between many top accounting and ERP platforms including Quickbooks, Oracle, SAP, and Microsoft Dynamics. In addition, it scores high with users for its supplier information and supplier management functionality. 

Pros

Planergy consistently garners ratings of 9 or above (of 10) in all general categories from G2's verified users. The platform is reported as being easy to set up and use. Multiple reviewers noted the responsiveness of the customer support staff who helps users with setup and issues. 

Cons

Several reviewers found issues with the flexibility of the platform’s search features. Rigid search parameter rules mean that small issues such as typos or syntactical changes may result in cases of zero returned search hits. Other users reported other minor glitches in the search function, particularly the inability to retain search parameters when paging back from a completed search result. 

3. Procurify

Procurify is a purchasing platform that streamlines your purchasing process and workflows. It helps organizations speed up the approval process and remove budgetary bottlenecks. With its simple procurement system, Procurify lets buyers submit purchase requests through a dynamic interface. The system keeps user spending on track through real-time, customizable budgets.

Procurify offers distinctive features such as a virtual and physical spending card system. Using this system, organizations can issue cards to every employee, apply balances to those cards for corporate spending, and maintain full visibility into spend practices by user. The card also allows organizations to realize between 1% to 3% cashback for purchases made on any physical or virtual card. 

Pros 

Procurify users point to ease of use, flexible and speedy approval workflows, and ease of doing business as the major selling points for this platform. This platform is ideal for mid-market organizations whose procurement software needs are beginning to outpace less robust vendor management solutions. 

Cons

Users report that some of the platform’s accounting and budgeting features could use improvement. In addition, catalog functionality is limited to simple ordering. Analytics and important data such as order duplication or trend/usage reporting are not available via the catalog. 

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4. Precoro

Precoro is an e-procurement software tool that aims to simplify users’ procurement processes and user experience. Where other systems lean heavily into integrations that communicate to a wider array of tools, Precoro delivers on a promise of easy onboarding with short implementation times and out-of-the-box functionality for users that want to get up and running quickly. It also offers more robust features and plenty of integrations to meet the needs of advanced users.

Pros

Users enjoy the Precoro platform for its accessibility and financial insights, giving it high ratings on its visibility, spend management, and purchasing automation functionality. The company focuses on delivering complete freedom from paper-based and manual processes in order to save time and money. This flexibility makes Precoro a solid mid-market solution that serves a variety of business needs. Many reviewers commented on the useful spend analysis capabilities of the system. 

Cons

Some reviewers pointed out limitations regarding flexibility improvements for building purchase orders. While Precoro offers integrations, some users experienced issues with implementing these successfully. 

5. Coupa Procurement

The Coupa Procurement module is one component of the Coupa Business Spend Management (BSM) suite of tools and services. This large procurement tool, serving enterprise customers in the healthcare, retail, and education space, offers a host of use cases including procurement of goods, services, and administration of contingent worker spending. 

The platform offers guided buying as a feature, and some of its top features as reported by users are purchasing functionality, spend visibility, and procurement sourcing. It is useful for organizations seeking an enterprise-class, all-in-one solution with a modular approach.

Pros

The Coupa Procurement platform receives high marks for fast processing time and easy generation of POs and purchase requisitions.

Cons

Some users describe the UI as needing a steep learning curve. Some users reported reliability issues, and others pointed to stiff reporting functionality that requires workarounds to increase visibility. 

—

If you’re ready to take the next step with an automated procurement platform, begin your evaluation process with a live demo of the Order.co platform today. 

The procurement function plays a critical role in every company’s financial health and performance, even in early stage businesses. The nature of purchasing and procurement is such that organizations swiftly find themselves overwhelmed by valuable data with no meaningful way to analyze or benefit from it. This volume of information can lead to wasteful spending and lost opportunities.

Fortunately, good procurement management practices can help even small organizations organize their invoicing and keep track of spending. Codifying and streamlining processes makes it easier for stakeholders to raise their hands when needs arise. It further helps your organization quickly approve the request and arrange for payment of goods. 

When companies build successful procurement initiatives, they realize cost savings that could otherwise remain hidden in a sea of line items and renewal contracts.

To achieve these outcomes, it’s important to understand the basics of procurement and how to manage it effectively. As your company grows, you’ll have a process that translates into more automation and software to help you scale.

In this article, we cover the important features and benefits of good procurement management, as well as ways to advance your procurement practice using technology. 

By the end of this post, you’ll know:

1. What procurement management is
2. The role of procurement management in saving money and time
3. Why and when to automate your procurement management process

Let’s start by understanding exactly what procurement management is and how it fits into your organization.

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What is procurement management?

Procurement management is the process by which an organization conducts, approves, tracks, and optimizes its spending on supplies and services. The main mission of a procurement team is to reduce the bottom-line costs of purchasing and streamline the process of getting the goods and services a company needs to produce products. 

A strong procurement management plan comprises many functions, including:

• Resource planning
• Supplier sourcing and evaluation
• Purchase requisition approval
• Purchase order processing
• Order reconciliation
• Vendor payment processing

Procurement management is a component of the larger supply chain management (SCM) function, dealing with internal materials sourcing and management. While many organizations treat procurement and supply chain management as separate functions within the organization, their operations and objectives are closely related. 

Procurement serves as a support system for supply chain operations. It’s the sourcing partner that enables the supply chain to find and acquire products that meet or exceed quality standards. 

The importance of procurement management

If you’re running a household, getting a handle on spending is the number one way to improve your long-term personal finances. If you’re a growing business with a vision for long-term success, getting a handle on your procurement practices has the same effect. 

Solid procurement management strategies are the first line of defense for reducing costs and stabilizing cash flow. They form the basis of your budgeting and forecasting functions and ensure that your revenue is used as efficiently as possible. The money you save with insightful procurement can then be invested in business growth, ensuring stability for the long term. 

To establish a functional procurement management system, you must be able to: 

• Give stakeholders a standardized process for making requests
• Establish an approval process and guidelines to evaluate price, terms, and risk
• Build an efficient process for tracking, reconciling, and paying for goods 
• Harvest data from the previous steps for use in future planning

By establishing this process, you realize many benefits and surprising cost savings in the short term.

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The Complete Guide to Procurement Management KPIs

Dive deep into how your team can benefit from tracking procurement KPIs, the 15 most important KPIs to track, and a detailed worksheet to help you calculate which KPIs suit you!

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Key benefits of a strong procurement management process

Creating a well-documented, structured procurement management process offers many ways to increase efficiency and reduce costs, such as:

• Strategic sourcing: Committing to vendor management in your procurement process helps you to identify the best potential suppliers by price and terms and consolidate them into a preferred vendor list. Sticking with a small list of pre-vetted, trusted partners reduces research time and allows you to fully leverage your existing partnerships and pricing. 
• Streamlined purchasing: A slow purchasing process reduces your ability to quickly source and receive vital goods. Formalizing your purchase requisition and approval workflow improves purchasing timelines and reduces your overall project procurement by days or even weeks. 
• Reduced waste spending: Maverick spending accounts for thousands in waste spending across your organization. Closely tracking your procurement process eliminates the process gaps that allow maverick spending to thrive. By having a standardized process for getting requisitions approved and processed, every stakeholder can get their needs met without relegating tail spend to a corporate card or an expense report.
• Risk management: Though lesser-discussed in terms of cost-savings measures, successfully mitigating risk in your supplier relationships helps you avoid unforeseen costs and unplanned spend. Standardizing your procurement process, approvals, and contract reviews can help you avoid out-of-stock issues with suppliers, stabilize on-hand inventory, and improve contingency planning for shipping delays. 

5 Ways to improve procurement management

Procurement management requires dedicated resources, processes, and metrics management to create accuracy and scalability. The below activities and upgrades ensure your procurement practice continues to grow in step with your organization. 

Document: Formalizing the procurement management process with a documented policy helps teams identify and address gaps in the current approach. It sets standards for procurement activities like spending, purchasing policies, and performance measurement. It also ensures stakeholders are well-informed about the process and have access to the information and tools needed to perform their role within policy. Lastly, it creates an audit trail for regulatory compliance and eliminates the conditions that lead to maverick spend.

Centralize: Bringing procurement activities into a procurement platform helps streamline operations and improve visibility over the entire process. Centralization offers a comprehensive overview of the entire process, from request to delivery, enabling real-time tracking and reporting. Enhanced visibility helps identify improvement opportunities and address potential issues promptly. A centralized platform also minimizes the work associated with purchase orders, invoicing, and payment tracking, reducing errors resulting from manual data entry.

Integrate: Procurement doesn’t operate in a vacuum. Integrating procurement data with other data systems in your finance organization ensures that all relevant information is available across systems. This provides centralized purchasing management, empowering quick and informed decision-making. Integrated data systems offer a comprehensive view of financial operations while cutting down on redundant processes and potential entry errors.

Automate: Automating common or repetitive procurement processes is a vital means to streamline operations and reduce time spent on manual data entry. In fact, nearly three-quarters of companies are actively working toward enhancing and developing their data, insight, and analytics capabilities. Automation simplifies tasks like purchase order creation, order approval, three-way matching, and reconciliation, freeing up valuable resources for more important tasks. Automation also simplifies metric tracking by collecting data from multiple finance and procurement data sources, making it easier to spot trends and identify improvement opportunities quickly. 

Measure: Measuring performance is essential to continued procurement improvements. Vendor scoring tracks supplier performance by rating vendors based on criteria like quality, delivery time, and price. Procurement performance metrics such as spend analysis, invoice processing accuracy, and turnaround time help identify trends in cost management. Monitoring these key performance indicators allows for more accurate forecasting, better cost control, and greater resource optimization.

3 Best practices for better procurement management

Refining the methods used to manage procurement within your organization doesn’t have to be complex. Three techniques help companies of all sizes improve their purchasing and tracking practices for better overall results.

1. Use spend analysis to optimize cost

Spend analysis is a process that identifies procurement savings opportunities. Finance analysts review data from invoices, contracts, receipts, purchase orders, and other sources and use those insights to optimize spend allocation and negotiations. This helps track supplier performance, uncover savings opportunities, and optimize spending. It provides a clear overview of resource utilization and informs strategic sourcing decisions, reducing costs and improving operational efficiency.

2. Digitize and automate wherever possible

Digitizing and automating procurement processes can save valuable time, reduce administrative costs, and boost efficiency. Automating workflows with digital invoices helps organizations keep track of all their purchases in one place and easily review purchase history. It also prevents manual errors and enables faster approvals, making it easier for organizations to meet compliance requirements. 

Automated workflows, alongside digital ordering and invoicing, allow companies to take advantage of automated order processing and payment methods, resulting in fewer supplier delays. This ultimately helps companies maintain better control over their resources and budgets by having more accurate forecasts about future spending needs.

3. Build a vendor lifecycle management program

A vendor lifecycle management program can help organizations monitor their suppliers’ performance by collecting and analyzing data on past purchases, such as delivery times and order costs. This information can then be used to identify vendors delivering good value and quality service and award them more business. Conversely, vendors that are underperforming can be identified and replaced if necessary.

The process of onboarding new vendors is also much easier when using lifecycle management. It centralizes all relevant details associated with each supplier, enabling faster processing of orders once the vendor is approved. Similarly, offboarding old vendors is simplified with automated processes for removing access privileges and archiving related records.

Ebook

The Complete Guide to Procurement Management KPIs

Dive deep into how your team can benefit from tracking procurement KPIs, the 15 most important KPIs to track, and a detailed worksheet to help you calculate which KPIs suit you!

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Why should you automate procurement management?

Procuring goods and services is one of the most impactful financial activities in your organization, with procurement costs representing up to 50 percent of a company’s revenue, depending on the industry. 

With so much money at stake, understanding your procurement spending is essential for reducing bottom-line costs and improving budget efficiency. But conducting these practices across dozens or hundreds of vendors — potentially generating thousands of monthly invoices — is a tall order. 

Procurement automation helps companies achieve all these objectives without cumbersome manual processes. With automation, companies enjoy many money-saving advantages.

• Intelligent procurement management allows procurement professionals and supply chain team members to spend less time on low-value and repetitive tasks. It creates more opportunities for data-driven decision-making, high-value project management, and capacity planning. This increased time for high-impact activities results in better ROI and spend efficiency. 
• Automation helps your finance and AP teams keep up with growth. Manual invoice processes are costly and prone to discrepancies and inefficiencies. Even with low exception rates, AP clerks are limited in how much processing they can perform. By replacing your manual processes with a touchless, automated system, you can batch, process, code, and issue thousands of payments simultaneously. This significantly reduces costs and helps your purchasing department realize early payment discounts.
• The benefits of automation go beyond reduced spend to help you form better supplier relationships and realize benefits over the long term. Automation streamlines the management of procurement contracts, enables vendor lifecycle analysis, and improves accountability for the quality of goods and services purchased. By managing your contracts effectively and automating your process for faster payments, you and your suppliers all win. 

What to look for in a procurement management software solution

If your organization is considering improving its business operations with automated procurement software, a thorough evaluation process will be necessary. Your current procurement management system, monthly invoice volume, tech stack, and typical procurement activities all factor into which potential suppliers could work for you. 

Any platform you choose should offer features like:

• Full integration options: An automated procurement platform should operate as a component within your larger financial or accounting infrastructure. The procurement platform should also share data across systems to reduce issues and redundancy. Look for solutions that offer full integration capabilities with your other platforms and planning apps.
• Robust analytics tools: The wealth of data generated in your procurement process is there to be harnessed for data-driven decision-making and cost-savings analysis. Advanced reporting tools allow you to surface real-time data across your organization by location, category, product type, and GL code. Look for a solution with a full complement of reporting, analysis, and visualization tools.
• Budget controls: Automated purchasing controls make the purchase requisition process easier for your stakeholders, empowering them to serve their own needs while keeping organizational goals in mind. Dynamic budgeting controls provide protections from overspending for purchasing decisions. These can be administered by dollar value, role, location, or other key parameters. Be sure the solution you choose has a sufficient budget and approval workflows to encourage self-service without sacrificing cost control.

The above features will help your organization maximize the flexibility to create and administer purchasing workflows, improve purchasing efficiency, and share financial information organization-wide. Best-in-class options like Order.co offer even more ways to streamline and automate your procurement function.

The added advantages of managing procurement with Order.co

The Order.co procure-to-pay platform goes beyond invoice processing and vendor management functions. It allows clients to streamline their entire purchasing process into a curated experience. Once purchases are complete, our consolidation tools allow you to process fewer invoices per supplier or even reduce supplier payment to a single event every month. 

Order.co drastically increases the efficiency of procurement practice by accomplishing three simple steps:

1. Creating a unified marketplace: Purchasing inefficiencies can creep in from the moment a purchase request is made. By creating a single, curated catalog of products, Order.co empowers your stakeholders to service their needs through a pre-approved list of products and suppliers. Instead of spending time looking for pricing and interacting with unknown providers, your employees will have a simple method to research, select, and complete their supply and materials orders. 
2. Streamlining the procurement process: Order.co helps users manage the procurement process from start to finish, from choosing the best products and creating a purchase requisition to approving, fulfilling, and paying for purchases. The platform gives stakeholders total visibility into the process and ensures a speedy, accurate process.
3. Consolidating ordering and invoicing: A large organization with multiple locations generates potentially dozens of purchase orders per day. This creates headaches for procurement and AP teams processing and coding a constant flow of similar invoices. With Order.co, you remove the redundancy from your procurement and accounting process. The platform also allows you to consolidate all invoices from across your supplier network into one invoice for faster processing.
4. Integrating invoice payments: Order.co offers even greater flexibility in processing your purchase orders and payments. The system allows users to directly pay vendors with whom you have advantageous terms or use Order.co as your vendor of record and pay for all purchases across every supplier through a single invoice. With any payment option you choose, Order.co’s automated process creates perfect coding and line-level visibility for granular reporting capabilities.

These advanced product features help clients of every size — from small businesses to major brands such as WeWork — effectively manage their procurement processes and get spending under control while greatly improving efficiency. 

If the right procurement management platform could make a difference in your budget optimization and operational efficiency, we invite you to request a demo of Order.co. 

While COVID-19 offered a sobering reminder of the limits of our public healthcare systems, it also shed light on the previously “invisible” supply chain system we all rely on. Within weeks of the pandemic, shortages and delays revealed the impact and relative delicacy of the massive network enabling our daily life and work. 

Despite our collective crash course on supply chain management, there remains much confusion about where the procurement function ends and supply chain management begins. But understanding the difference is the first step in improving your company’s operating efficiency, so the distinctions are important. 

With that important goal in mind, today we’re taking the time to disentangle the roles of purchasing, procurement, and supply chain management within organizations.

By the end of this article you’ll know:

• The major functions of the Procurement and Supply Chain Management departments within an organization.
• How procurement and supply chain management differ, and where they overlap. 
• How supply chain management and procurement can work together to produce better outcomes.   

What is procurement?

In simple terms, the procurement process focuses on evaluating new suppliers and working with existing ones to supply raw materials, goods, and services for your business. The procurement function is largely one of relationship management. Great procurement teams foster strong partnerships with both their internal clients and their external suppliers in order to meet operational objectives.

Procurement serves as a necessary bridge between the finance team and departmental stakeholders in larger organizations, making it easier for departments to get what they need to produce goods while providing accountability and data for financial approval. 

Procurement is sometimes confused with purchasing. While the two terms are used interchangeably within many organizations, there is a distinction. Where purchasing describes the act of getting and paying for materials, procurement covers a much wider range of activities, such as:

• Needs identification: Understanding company needs and initiatives, developing forecasts, and planning for resource procurement to meet deadlines.
• Supplier management: Handling the supplier lifecycle from evaluation and onboarding to renewal or termination. 
• Negotiation: Using benchmarking and leveraging relationships to secure the best terms and pricing.
• Contract management: Ensuring suppliers meet contract terms and deliver goods on expected timelines.
• Receipt of goods: Receiving and reconciling invoices against the purchase requisition, purchase order, and invoices to ensure accuracy and correct delivery of goods.
• Payment: Approving, coding, and processing supplier payments in a timely manner. 

Ebook

The Complete Guide to Procurement Management KPIs

Dive deep into how your team can benefit from tracking procurement KPIs, the 15 most important KPIs to track, and a detailed worksheet to help you calculate which KPIs suit you!

Download the guide

What is Supply Chain Management (SCM)?

A supply chain is the network of suppliers, service providers, logistical partners, and other organizations who work together to supply companies with raw materials, manufacture those materials into products, and deliver them to the end-user. Where procurement is the bridge between upstream suppliers and the organization, supply chain management is the bridge between the downstream network, and the promotional and logistics partners connecting the company and its customers.

It’s important to note that supply chain management is more than just shipping goods. While delivery is certainly part of supply chain management, it represents only a small portion of the overall function. Managing the manufacturing and the flow of goods to your buyers encompasses a much more complex set of processes. 

Supply chain management teams are responsible for:

• Inventory management: Managing and tracking the intake of both raw materials and finished goods. Maintaining inventory levels of necessary components to meet production timelines.
• Manufacturing: The process and timeline of turning raw materials into products, and the methods of improving efficiency in their production.
• Supply chain risk management: Evaluating the stability of the supply chain network, and the ability of your suppliers to help you get goods to market on time and at expected cost. 
• Quality control: improving the overall condition of products and reducing manufacturing issues and product defects. 
• Delivery and return management: Getting finished products from the manufacturing site or wholesale warehouses to distribution points (retailers, etc.) through logistics providers. Handling returns of defective or unwanted products. 

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The Complete Guide to Procurement Management KPIs

Dive deep into how your team can benefit from tracking procurement KPIs, the 15 most important KPIs to track, and a detailed worksheet to help you calculate which KPIs suit you!

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How do procurement and supply chain management differ?

Procurement and supply chain share the core objective of driving organizational success, though they achieve these in different ways. Procurement is a subset of the overall supply chain process.

Some key differences between the two are: 

• Procurement is “what goes in” in terms of production. This means that procurement professionals’ main goal is to acquire materials and services for use. Supply chain management is “what comes out” of those materials. Supply chain professionals are concerned with taking those procured raw goods and services and transforming them into products.
• Procurement is a support system for production. Supply chain management serves as the agent of production and distribution of goods. 
• Procurement’s objectives center on capital efficiency (finding ways to save money and improve value), whereas supply change focuses on operational efficiency (finding ways to reduce friction and distribution costs). 

What does procurement and supply chain management have in common?

Procurement and supply chain management have several objectives and critical activities in common. For example, both departments:

Identify cost-saving opportunities

Procurement’s main concern is with spend optimization and identifying ways to save money and improve the company’s bottom-line performance. On the supply chain side, the focus is on increasing the quality and value of goods to improve the topline. 

Procurement and supply chain both save money by maximizing spend efficiency on new projects, analyzing current projects and contracts to realize cost reduction, negotiating prices and terms to maintain the efficiency of current suppliers and vendors at renewal time. This may be achieved by practicing an effective supply chain strategy or employing procurement software for process automation.

Improve operational efficiency

On the procurement side, efficient administration of the purchasing process shortens the time to performance for purchases and reduces the research hours necessary to execute deals. 

On the supply chain side, building efficient production and distribution channels allows you to get goods to market faster, with more cost-effectiveness. Improving these processes on either side saves hundreds of hours in employee wages and increases the productivity of your manufacturing function. 

Build Strong Supplier relationships

Strong supplier relationships play a critical role in both procurement and supply chain. By improving your strategic sourcing practice with suppliers and distributors, you can leverage better pricing, reduce the time spent evaluating suppliers, and streamline functions like goods requisitions, order processing, and invoice payment. 

Ways supply chain and procurement can work together better

Though procurement and supply chain operate independently, their coordination is essential to progress. They are, in essence, the two legs responsible for your organization’s forward motion. 

Three ways procurement and supply chain can improve overall performance include:

• Improved cross-departmental planning: Planning and resource allocation for the manufacturing and distribution functions should be a team lift. Improving interdepartmental alignment can produce more accurate forecasts, offer a holistic view of contracts terms and their potential impacts, reduce capacity and warehousing friction, and improve the time from raw materials acquisition to delivery of goods. 
• Increased data transparency: De-siloing data can greatly improve the ability of both departments to reduce lead times, identify trends, and realize opportunities for cost savings and efficiency. Integrated software can bring the supply chain management process into full view, allowing procurement to better support supply chain functions and improve performance times from beginning to end in the production cycle. 
• Supplier streamlining: Though procurement many have a well-honed preferred vendor list, extending that concept to embrace an interdepartmental approach can more fully leverage optimal pricing and terms. Doing so can further reduce the time and cost of order and payment processing. 

If you’re looking to bring procurement and supply chain into better alignment for your organization, schedule a demo to see how Order.co can help coordinate their efforts.

In order to launch successful procurement initiatives, stabilize cash flow, and create savings, procurement organizations need to understand every facet of the P2P cycle from sourcing to settlement. Top procurement leaders use procurement analysis as part of a comprehensive strategy. It helps answer questions in a streamlined and automated way, which leads to better management of projects and an ample amount of cost savings. 

In this article, we’ll offer a comprehensive look at procurement analytics: What it is and how it can improve your cost savings and time efficiency. We’ll also cover best practices you can incorporate into your procurement practice to see positive impacts right away. 

Download the free ebook: The Procurement Strategy Playbook

What is procurement analysis?

Procurement analysis enables you to see what you're spending and where throughout your procurement department or business. It enables you to better control your costs and predict what to expect in the near future. It examines the data created in your procure-to-pay process and helps you extract and refine it to understand your spending. 

Well-visualized procurement data can show you:

• What the company is spending for goods
• How those compare to market benchmark numbers
• Where to get the best deal on future purchases 
• How to manage cash flow and improve your numbers over time

Procurement analysis brings a quantitative approach to procurement that draws on past performance and data analysis and integrates current market data to inform your future decision-making. The analysis is a bit more technical than a crystal ball, but when done correctly, it works like magic.

Ebook

The Procurement Strategy Playbook for Modern Businesses

Download the ebook to learn how to modernize your procurement strategy and realize the benefits of tech-enabled procurement.

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How spend analytics improves business outcomes

Procurement analysis isn’t just nice-to-have or a practice reserved for large corporations, because spending on outside vendors often accounts for 40-80% of a company’s total cost. That’s a significant expense, and one that must be closely monitored to avoid waste spending. 

Building a robust procurement analytics process can significantly reduce waste and improve your near-term and long-term business decisions, no matter your size or stage. 

• Improve your spend management
• Increase profitability 
• Establish performance metrics
• Evaluate supplier performance
• Identify cash leaks and savings opportunities in real-time  

7 best practices for saving on purchasing costs

If your company is experiencing the frustration of budget overruns and untrackable purchasing practices, it’s possible to increase your spend optimization and improve your bottom line quickly. 

The 7 best practices used by procurement teams regardless of size and stage are:

1. Formalize your procurement spend process

The first step to saving money is to establish a standard P2P workflow. Formalizing the procurement function helps your stakeholders understand precisely how to get from requisition to payment. This also helps you set spending rules, create accountability in every step of the process, and forms the foundation of effective contract management.

For example, establishing a process was one of the first steps to savings for NY Kids Club. Using Order.co, they moved away from a cumbersome, email-based purchase order process and got a handle on spending across the company’s 19 locations. Automating the process helped them eliminate wasteful spending that sapped their cash flow. 

2. Increase your procurement data visibility

To realize savings in your procurement spend, you need a granular understanding of where your money is going. Using a modernized, automated procurement analytics platform gives you complete visibility into your spending beyond simple “revenue minus expenses” accounting when you close the books. Complete data transparency allows you to analyze various data sets in every meaningful way: category, department, product type, supply base, tax nexus, geography, and more. 

Once your spend data is extracted and refined, a P2P platform can gather it into helpful dashboards to better help you visualize how the data is working This allows you to surface actionable insights and improve your procurement strategy more easily. 

3. Build strategic supplier relationships for sourcing goods

Vendor partnerships are beneficial for everyone, and they can help you realize significant cost reductions. By establishing relationships with preferred suppliers for high-volume and recurring purchases, you open the door to volume discounts and more flexibility in your purchasing. 

Relying on strategic vendor partnerships also saves time by eliminating redundant work, reducing due diligence, and eliminating much of the negotiation and onboarding associated with bringing on a new vendor. When you have a solid supplier management process paired with a well-curated list of preferred vendors, you can take advantage of the best deals and do so with considerably less friction. 

Ebook

The Procurement Strategy Playbook for Modern Businesses

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4. Stabilize your inventory and sourcing practices

Inefficient sourcing and inventory management can cost you money in various ways. For example, delivery delays and inventory shortfalls can stretch out production timelines. Rush orders can invite expediting fees, quality issues, and invoicing mistakes. 

By reducing these friction points, you can save many hours previously spent putting out fires, all while stabilizing your cash flow. Using a centralized P2P system like Order.co, you gain visibility into inventory levels, expected consumption, average shipping timelines, and project management estimates so you can have what you need on hand and deliver on schedule. 

5. Identify cash leaks with spend analysis

Once you have a formal process in place, it becomes easier to identify spending leaks in the workflow. Using a documented, repeatable process, you can begin to eliminate some of the most common money-wasting culprits, such as: 

Non-preferred vendor use - When spending happens, it often occurs using whatever supplier the purchaser believes will work best or give them the best price. The problem with this is stakeholders have no visibility into negotiated partnerships that can save the company money. 

Maverick spending - Even if you establish a preferred list of vendors and budget parameters, it’s useless unless your stakeholders can access them. Without information, they will typically  “buy” first and ask questions later. By centralizing your procurement process, you eliminate the occurrence of one-off purchases, corporate card-based purchasing, and unplanned spending by giving everyone access to the game plan and guardrails for their purchases.

Over-ordering or duplication - If multiple locations or departments are ordering goods in a decentralized way, chances are you’re losing leverage on negotiating volume pricing. By centralizing the order and payment process, you can use advanced analytics to better understand the total cost of ordering across locations, improve your category management, and use strategic sourcing to save money. 

What are cash leaks doing to your bottom line? Our free ebook will show you how to close those gaps for good.

6. Use AP automation to eliminate mistakes and busywork

Manual administration of your Purchase to Pay (P2P) process creates room for errors such as missed/late payments, over/underpayments, information mismatching, and erroneous data entry. These types of issues can generate late fees, stop orders, slow down closing activities, or create other costly outcomes. 

By integrating supplier invoicing, reconciliation, and payment into an automated system, you remove this potential and create a process that is easier to use and track. It also dramatically reduces the Finance team’s time investment in repetitive processes and frees up your AP staff to take on more meaningful projects. 

7. Get Order.co: Streamline your sourcing and payment process

To implement all these money-saving practices, you need a robust platform that brings your process, payments, and data under one roof. Using Order.co for as your P2P system, you can create a purchasing workflow that eliminates cash leaks and rogue spending, connects you with the best suppliers and pricing, allows speedy approvals, and simplifies your payment process with automated reconciliation and invoice batching. 

If you’re ready to realize cost savings and boost revenue with powerful workflows and advanced analytics, schedule a demo to see the Order.co P2P platform in action.

Are manual tasks, decentralized data, and poorly documented policies bogging down your financial operations? If so, it’s time to stop relying on short-term fixes such as increasing headcount, and start implementing automation in your Finance function.

80% of CFOs report accelerating their investment in digital finance functionality for 2022. These numbers exceed the investment in other areas like talent, fixed assets (real estate and equipment), and supply chain. While migrating to a platform is a significant project and investment, it’s the most efficient and scalable long-term solution. Human teams, no matter how large or well-trained, can’t beat technology for optimizing processes.

In this article, you’ll learn how to improve your operational efficiency and save money by:

• Streamlining your supplier list for better leverage 
• Establishing a formal purchasing process to improve productivity
• Building a cross-functional purchasing policy
• Automating AP to save time and money
• Integrating your systems into a single solution

Download the free ebook: How to Show Your CFO You're Saving Money

Where to start optimizing financial operations

If your accounting and finance processes aren’t yet running on automated platforms, there are still ways to build in efficiency and prepare for automation. Implementing a few small process improvements will have immediate upside in terms of efficiency, and pave the way for easier integration of platforms and automated workflows.

Let’s review the top five methods of increasing efficiency in your current Finance and Procurement functions: 

1. Use strategic sourcing to improve savings

Streamlining your vendor list and strengthening supplier relationships is one of the first and easiest ways to improve financial efficiency. While strategic sourcing requires some work to collect your supplier data and benchmark pricing, you can start the process with only a spreadsheet and some help from the purchasers in each department or location. 

Embracing strategic sourcing has many benefits, including:

• Cost savings: By relying on one supplier for a specific category or service, you can take advantage of volume discounts across locations, helping realize significant cost savings.
  
• Improves spend management: Streamlining your vendor list significantly reduces the number of invoices you process by consolidating your purchases across locations. Fewer invoices mean faster processing and opportunities to improve spend management.
• Consistency: Consolidation makes it easier to evaluate contracts for high-volume goods and services. By using one supplier to service all your locations, there’s no need to go back to the drawing board. No matter how many locations you service or how quickly you expand, the purchasing process will remain the same. 

2. Standardize your procurement workflows

Start your stakeholders on the right foot by creating a well-documented, repeatable purchasing and approval process. There are a few benefits to codifying your purchasing process that include:

• Faster process: A standardized workflow for purchasing makes the requisition process faster and cleaner for your stakeholders.
• Easier financial reporting: Standardizing your purchasing creates a paper trail for audits and financial reporting and captures important data for future spend analysis. 
• Improves internal processes: Approval workflows help stakeholders route approvals to the correct decision-maker. For instance, clear rules let them know when to include the Financial Operations Manager or Chief Financial Officer in high-value contract approvals.
• Creates transparency: It reduces the back-and-forth of manual or email-based approvals and builds transparency into the process. Stakeholders will know exactly what steps they must perform to get their needs met and have reasonable expectations of the timeline. 

3. Establish purchasing prerequisites

Identifying departmental prerequisites lets stakeholders know the conditions they must meet for capital expenditures. For example, if your Finance department has certain requirements for contracts, such as avoiding single-year discounts or bundled services. Outlining your prerequisites avoids friction and wasted time during the approval process. This is especially true when negotiating a contract with a non-preferred or new supplier. 

By setting expectations in advance, you won’t be caught heading back to the drawing board halfway through a negotiation, potentially saving hours of time for you, your sales rep, and your approvals team. Establishing these internal policies in advance also reduces risks and liabilities for your organization. It creates guardrails for finance and legal reviews and ensures everyone adheres to the practices that successfully reduce risk. 

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How to Show Your CFO You're Saving Money

Learn how to work in coordination with your CFO to drive operational efficiency and reduce costs.

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4. Automate your AP process

On average, companies spend about 1% of revenue on their Finance function, with top performers (as defined by APQC’s Open Standards Benchmarking database) coming in at just over .5%. For bottom performers, that number climbs as high as 1.6%. The difference between top and bottom is automation. 

When it comes to reducing waste spending, realizing cost savings, and improving productivity, there’s no better place to start automating than your accounts payable and accounts receivable functions. Moving to a touchless process has some excellent short-term impacts on your business, such as: 

• Speeds up invoice processing - Automated systems capture, code, and pay thousands of invoices per day, where full-time AP clerks typically average five processed invoices per hour.
• Reduces errors and fees - The reported average exception rate for manual invoicing is 13%. Even high-performing departments average 4%. Automating eliminates these exceptions and saves thousands in late fees annually.
• Increases early payment discounts - On the other side of the coin, moving to integrated payments and financial transactions speeds up the process. It helps companies realize more cost savings from suppliers.

5. Integrate your accounting and financial operations systems

Data silos between accounting and the larger finance organization create problems and reduce visibility. When the accounting and larger ERP platforms don’t integrate, you’re creating redundant work and opening the door to discrepancies. 

Integrating your accounting and finance platforms creates: 

• Cleaner data: Creates parity between the data in all your financial systems. 
• More visibility: Gives the finance operations team a full view of the numbers, in turn improving financial planning and forecasting. 
• Granular control: Helps finance get a handle on expenditures by location, team, department, and supplier to identify areas for improvement. 
• Better record-keeping: Improves the integrity of your financial records, quarterly/annual statements. 
• Accurate accounting: Supports GAAP accounting principles and audit preparation.

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How to Show Your CFO You're Saving Money

Learn how to work in coordination with your CFO to drive operational efficiency and reduce costs.

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Moving to an end-to-end procurement solution

While any one of the above tips can improve your financial operations and efficiency, implementing them all as part of a fully-featured procurement platform like Order.co helps the finance and procurement teams work together and revolutionize their practices. 

A procure-to-pay solution works by integrating your requisitions, invoicing, reconciliation, and payment processes into a single, automated system. These systems leverage AI and machine learning so your teams can get away from manual tasks. Automation removes many of the logjams and inefficiencies of manual operations and scales in step with business growth. 

A procurement platform offers the finance team:

• Consolidated invoicing and payments that avoid fees and promote savings.
• Lower costs for every aspect of the procure-to-pay lifecycle
• Better visibility into the financial activities that improve the bottom line. 
• Robust analytics and data visualization for data-driven decisions.
• Easier preparation of quarterly and annual financial statements.

Operations teams will benefit from:

• A single view of your purchasing lifecycle, from requisition to remittance. 
• A unified purchasing experience for stakeholders across all locations. 
• Curated, strategic sourcing that leverages the best prices and terms. 
• An approvals process that leaves behind guesswork, rejected requests, and risk.

With an integrated end-to-end solution, your finance, operations, and procurement teams can take advantage of advanced features to make better decisions and improve bottom-line strategy.

If you’re ready to future-proof your financial operations with end-to-end automation, get to know Order.co by scheduling a demo of the platform.