Procurement Process: The Anchors in the Supply Chain
Procurement in the supply chain management solutions refers to the buying process of supplies, raw materials or services at the most favorable price. The first step in the procurement process is to identify the requirements in a business. This is followed by a purchase requisition either in digital or manual format sent to the buyer for action. Today as the world goes into the digital era, there are a number of automated tools such as the Enterprise Resource Planning systems and the Electronic Data Interchange system to assist the backroom boys and the buyers through the process. While using an ERP system, the purchase order software installed, facilitates the purchase order entry as the next step in the procurement process. The request for quotes is followed by selecting a supplier based on the bids.
Post award management is another important factor that needs t be considered by the organizations. Understanding the lead time required, expected delivery quantity, actual delivery date, and the price quoted are very important aspects. The ERP systems facilitate such data maintenance. Any deviation in the delivery date or the quantity shipped or quality of products may cause serious concerns for the organization. Since procurement involves purchasing decisions which are affected by factors such as delivery and handling, benefits and price fluctuations, purchasing professionals make use of the automated systems to perform cost-benefit and cost –utility analysis.
Technological enhancement has brought a number of purchase order software available in the market. However, with the advent of the cloud computing technology, cloud based procurement process has taken the business to higher levels of e-procurement. The cloud based process besides automating the purchasing process also integrates the buyers and suppliers through IT systems, thus forming a value network of collaborating partners. By automating the end-end workflow from order to invoicing and delivery the cloud based procurement process helps to increase organizational efficiency while reducing operational costs as well as enhancing control over the procurement activities.
Such cloud based procurement process takes an organization much beyond the simple purchase order software and post award management process. This procurement process has innumerable features such as management of agreements and contracts that help to speed up and simplify price list administration, verification of deliveries, product comparisons, article selection, pre-accounting, detailed delivery reports, order confirmation and dispatch advice, providing end-to-end display of procurement transactions.
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