Automation in Procurement: 5 Processes You Must Automate

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Processes’ automation is one of the biggest trends for businesses, and it has revolutionized many processes, improving efficiency and productivity in various industries.. And when it comes to procurement, automation is the key that unlocks the door to a more efficient, cost-effective, and streamlined process. By automating time and labor-intensive procurement tasks, like purchase order creation, supplier sourcing, and invoice management, companies can optimize their spending, reduce manual errors, and increase their bottom line, all without making excessively large IT investments or hiring more employees.

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Ok. It's all good and great. But what is procurement automation exactly? How can it benefit your business? And what processes should you consider automating to get the most out of your investment? We'll answer these questions and more in this comprehensive guide to automation in procurement.

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Let's start with the basics.

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What is Procurement Automation?

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Procurement automation is the use of software and/or technology to streamline the procurement process in a business. This means that instead of spending countless hours on tedious, manual tasks like purchase requisition, supplier management, purchase orders (POs) creation, and invoice processing, you'll use software to do the heavy lifting for you. No more chasing for approvals, no dealing with piles of paperwork, and no manual errors; every step of the procurement process is digitized in a centralized platform.

This presents a great opportunity for businesses to increase efficiency and reduce costs in their procurement processes. By implementing procurement automation software, businesses can speed up the procurement lifecycle, reduce the probability of human error (e.g., typos or misplaced orders), and free up employees to focus on more strategic and important tasks that drive the business forward, like decision-making, planning, and building supplier relationships.

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Top 5 Procurement Processes to Automate

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The definition of automation in the procurement process is now clear. It reduces manual efforts, increases efficiency, and optimizes costs. Now, the real question is: what processes should you automate to get the most out of your investment? Well, it depends on your business's specific needs and goals.

However, here are the top 5 procurement processes that are worth automating for most businesses:

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1. Purchase Requisitions

Purchase requisitions, also known as purchase requests, are the starting point of every procurement journey. They're the spark that ignites the entire purchasing process. However, when handled manually, purchase requisitions can quickly become a bottleneck. Why? Because they involve many moving parts: different departments, multiple approvers, and extensive back-and-forth communication. This manual approach consumes a lot of time and leads to problems like lost or misplaced requests, delayed approvals, and poor communication among stakeholders. These inefficiencies can stall critical projects and hinder the overall productivity of the organization.

Procurement process automation streamlines the purchase requisitions process by creating a centralized system where all stakeholders can submit, review, and approve requests in a timely and organized manner. Automated procurement software does not only reduce the time of approval cycles but also eliminates repetitive steps, allowing procurement teams to handle more requests in less time.

A robust procurement automation platform also sends notifications to approvers, either via email or company communication tools (such as Slack), ensuring that no request goes unnoticed.

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2. Purchase Order

Another procurement process that's ripe for automation is purchase order processing. Manually creating and managing purchase orders requires a lot of effort, time, and resources. It involves a series of steps, such as drafting the PO, getting approvals, sending it to suppliers, and tracking its delivery. And when there are multiple POs in the pipeline, it can become overwhelming for procurement teams to keep track of them all. This can lead to delays, errors, and even missed opportunities.

Procurement process automation allows businesses to automate the entire process of creating, managing, and tracking purchase orders. This includes automatically generating POs based on approved requisitions, sending them to suppliers via email or other electronic means,  and tracking the status of POs in real-time. No more manual data entry, chasing down suppliers for updates, or worrying about lost POs. And with everything stored in a centralized platform, you've complete visibility and control over all your purchase orders, making it easier to manage them efficiently.

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3. Invoice Management

Invoices are one of the most common documents in the procurement process. However, manually managing invoices is nothing but a headache. From misplaced or poorly managed purchase orders and submission delays to uncontrolled spending and compliance issues, the manual approach of invoice management can lead to a lot of problems, like delayed payments and lack of transparency.

However, with automated invoice management, all these problems can be solved. Automation tools can streamline the entire process, from invoice creation to approval and payment. These tools can capture data from invoices, automatically match them with corresponding POs, and route them to the right team for approval. By automating invoice management, businesses can reduce the time required for manual processing, eliminate errors and discrepancies, and ensure timely payments to suppliers.

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4. Supplier Sourcing

Supplier sourcing is the backbone of any procurement process. If businesses don't have an efficient sourcing strategy, it can lead to poor supplier relationships and ultimately impact the bottom line. Manual sourcing processes involve a lot of research, communication, and negotiation with potential suppliers. This can be a time-eating and arduous task, especially when dealing with a large number of suppliers.

Automating the sourcing process can help businesses streamline vendor selection and ensure that the chosen suppliers align with their procurement policies. Procurement software enables businesses to create a centralized database of preferred vendors for different categories of purchases. This not only saves time but also helps maintain consistency and compliance in supplier selection. Moreover, with automation, businesses can easily track supplier performance (e.g., delivery times, quality of goods) and use data-driven insights to improve their sourcing strategies.

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5. Processing Emails

For businesses that receive emails related to procurement, manually processing them is a time-consuming and error-prone task because it involves a lot of work: sorting through piles of emails, extracting relevant information (e.g., prices, dates), responding to requests or inquiries, and transferring data to internal systems (e.g., ERP); a process that can take up hours or even days to complete.

Procurement artificial intelligence automation software can significantly reduce the time and effort required to process emails. AI-powered procurement automation tools can accurately manage your business’ inbox: classify emails based on their purpose (e.g., urgent order or customer service inquiry), extract relevant data, suggest pre-generated replies, and even automatically respond to simple requests. AI solutions can also perform sentiment analysis, helping businesses identify the intentions and sentiment behind the sender's email. So, instead of manually processing emails that pile up in your inbox, your team can focus on more strategic tasks like supplier relationship management or negotiating better deals.

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4 Procurement Automation Benefits

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Now that we've pinpointed the top procurement processes to automate, it's time to explore what kind of benefits businesses can expect from implementing procurement automation.

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While there are many reasons to automate procurement processes, some of the most notable ones include:

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1. Time Savings

One of the most significant procurement automation benefits is time savings. As said earlier, manual procurement processes can be incredibly time-consuming, taking hours or even days to complete. By automating repetitive tasks in procurement, like POs creation, invoice management, and order tracking, businesses can significantly reduce the time and effort required to complete these tasks. The time otherwise spent on manual work can be invested in other strategic activities that bring value to the business.

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2. Reduced Errors

When it comes to manual processes, human errors are inevitable. From simple mistakes like typos and data entry errors to major issues like duplicate orders and incorrect payments, these errors can lead to significant consequences, including financial losses and damaged supplier relationships. Automated processes reduce the likelihood of these errors by eliminating manual data entry and creating a more streamlined and standardized process. If any mistakes do occur , automated procurement systems can flag them and send notifications to the appropriate team members for review and correction. The result: fewer mistakes and more accurate data.

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3. Better Supplier Management and Relationships

Automation fosters transparency, which is vital for cultivating long-term relationships with suppliers. Every step is visible to all parties involved. Buyers can place orders against the best quote without any worry, and suppliers can respond to bids promptly. Automation provides real-time updates on the status of orders, which eliminates the need for constant communication between buyers and suppliers. Additionally, AI-powered software can draft personalized emails to inform suppliers about order status, changes in delivery schedules, or other relevant information. That way suppliers feel more involved and connected throughout the procurement process, leading to better relationships and increased trust.

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4. Optimized Costs

For businesses, cost optimization is a top priority. It is what drives profitability and helps them stay competitive in the market. Automation can help businesses achieve this by providing real-time data and insights into their procurement processes. With automation, businesses can track expenses, identify opportunities for cost savings, and negotiate better deals with suppliers.

Automated systems are designed to scale as the business grows, so, during peak seasons or periods of high demand, businesses don't have to worry about incurring additional costs to handle increased procurement volume, like hiring extra staff or investing in new software. With automation, businesses can efficiently manage their costs and ensure that procurement processes are as cost-effective as possible.

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Ready To Transform Your Business with Automated Procurement?

Automating procurement processes can bring a multitude of benefits to businesses, including time savings, reduced errors, better supplier relationships, and optimized costs. But it's not just about choosing any procurement automation tool. You need a solution that is tailored to your specific business needs, integrates with your existing systems (such as ERP or CRM), provides real-time data and insights, and is user-friendly for your team to adopt easily. And that's exactly what our AI Assistant for procurement offers. turian is an AI-powered procurement solution that uses large language models (LLMs) to automate procurement processes and streamline workflows.

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Our AI solution can process emails (regardless of format or language), extract relevant data, validate purchase orders against what's in your system, and then update your ERP/CRM in real-time. But that's not all. turian can also handle requests for quotations (RfQs), compare suppliers to identify the best quote and draft personalized emails to keep your suppliers informed about order status or delivery schedule changes. Plus, our AI Assistant offers complete visibility and control over the automated procurement process. You can set custom rules and policies, enable human review and approval flows for sensitive actions, and get real-time process insights via built-in analytics.

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turian works seamlessly with all leading ERPs, like Microsoft Dynamics, SAP, Netsuite, etc., and what's more, it's user-friendly and easy to integrate into your existing systems. You don't need to invest in new hardware or software, hire extra staff, or worry about scaling during busy seasons.

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With turian, you can streamline your entire procurement workflow, all in one place. If you want to test how turian can transform your procurement operations, we offer a Proof of Concept (PoC) for free where you can evaluate our AI solution's capabilities and see how it fits your business needs.

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