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Why does your search for the finest Procurement System seem pointless?
Why does your search for the finest Procurement System seem pointless?

discover | Wednesday - 01 / 05 / 2024 - 9:00 pm

Why does your search for the finest Procurement System seem pointless?

First and foremost, I am warning you that you are wasting your precious time if you are expecting to read various benefits of the finest procurement system, which just so happens to be our procurement system.

Let’s take a look at our approach in Logix – ERP SOLUTIONS, I do not doubt that you concur with it.

To have a procurement system or a program and to know how to deal with it is not sufficient, as systems and programmes are only tools. However, the hard part is to comprehend what to do and how to do it, regardless of clicking the coloured buttons.

Undoubtedly, you are wondering, what am I going to discuss herein.

Have you ever heard of “Business Process Reengineering”?

Business Process Reengineering (BPR) means primarily rethinking and radical redesigning processes for the association’s progress of work and operations. BPR mainly aims to significantly improve crucial areas such as decreasing costs, improving quality, providing services and overall efficiency. BPR’s purpose is to challenge the current work mechanisms in addition to getting rid of the old practices and providing effective innovative approaches.

I am sure that you are not interested in reading such information and would like to have some scientific examples instead.

Here you go,

For example, most international companies usually face challenges in efficiently coordinating procurement activities across their branches. Thus, by inspecting the situation within one of these branches, we would find that the procurement teams are overwhelmed with addressing the orders due to the abundance of manual tasks (such as purchase orders, bill processing and approving payments). We may also find the Regulations and Risk Management adherence problem at the senior management level, a crucial aspect of the procurement field.

According to the aforementioned, how would BPR contribute to solving these problems?

Let’s first start with…

Dispersal among several branches problem.

This problem may be solved only if these branches abandon data decentralization. These branches shall look for a system that works on the centralization of the procurement management and provides a unified platform that efficiently manages the procurement activities (from the purchase orders to the approvals and the Vendor Management).

Abundance of manual tasks

What would happen if the ERP system’s provider had persuaded you of his system, as the finest procurement system, just for you to find that your workers are still manually conducting the routine procurement functions such as creating purchase orders, auditing invoices and delegating payment to vendors?

It does not seem like a win-win scenario, what would you do then?

You may simply solve it by procurement automation.

Let’s imagine the following:

  • You may automatically create purchase orders.
  • You will process invoices without further delay.
  • You will be able to approve payments promptly.

You will conduct all the aforementioned without any personal intervention. As they say, procurement automation would be a game changer. This simplified approach would lead to decreasing the working costs and effectively and accurately executing the purchase orders. This leads us to the following problem…

Poor relationship between the procurement department and vendors.  

Theoretically, the procurement department shall have a depot rich with information. However, practically, most purchase orders are still processed via E-mail messages and data tables, which results in lots of supply chains problems (we have previously discussed it in a previous post).

Moreover, the solution lies in smooth communication and cooperation with vendors by creating a centralized procurement center which helps in evaluating procurement KPIs in addition to sharing the updates “production tables – quality requirements – orders changing” in the effective time, which is provided by the Enterprise resource planning systems (ERP)

Therefore, the timelines would be decreased and the quality of the raw materials and components would be improved enhancing your association’s relationship with vendors.

Data density

Perhaps I do not have to explain this challenge, which can be summarized as follows: lots of procurement data is distributed with different systems and platforms, which your association is struggling to integrate into a unified and are easy to manage database.

Consider the term “easy to manage”, and tell me, are you ready to direct the procurement team’s efforts to complete this task? Or are you looking for an easier solution?

Using artificial intelligence techniques within procurement allows you to analyze a large amount of data that exceeds the amount possible in the past. Thus, we can state that artificial intelligence’s ability to deal with large amounts of data may provide better and more accurate real-time data visions. For instance, artificial intelligence may analyze the procurement behaviour of different categories of customers, which helps you directly in allocating your procurements according to the customers’ needs.

Furthermore, artificial intelligence may also be used to read historical data and to learn from previous behavioural patterns. it may also be beneficial for manufacturers in terms of creating quotations and estimations.

Speaking of quotations……

Identifying quotations upon launching new products

It seems like a significant challenge, right?

Fortunately, we may use artificial intelligence in procurement as well. Through profound analysis of similar products produced previously, artificial intelligence may grant you greater visions regarding the actual costs, which facilitates creating accurate quotations for your customer.

However, we would publish a separate post concerning the artificial intelligence applications in sales, but I had to mention this point because it relates to the procurement.

Regulations and Risk Management adherence

As we previously agreed, adherence is considered a crucial aspect of the procurement field.

Let’s just jump to the point that ERP has multiple advantages such as: imposing regulatory requirements – unification of procedures – and reserving comprehensive records.

Now, I have to refer to an advantage that may only be found in the Logix system: the system solely monitors the adherence of the industry regulations, which reduces the possibility of facing relevant legal procedures and sanctions. Additionally, it would not save the company from potential financial sanctions, and it would enhance its reputation as a reliable partner in the industry.

It is okay to promote our system, right?

ERP systems deficiencies in dealing with procurements

Although ERP systems provide valuable tools for the different tasks of your company, their inherent design may not fully conform to specific procurement needs.

Integrated procurement units aim to address this gap, but their implementation may take lots of time and lack the flexibility and jobs designed for optimal procurement management.

The main challenges that may hinder effective procurement within the ERP systems are as follows:

  • Limited Flexibility: the standard ERP structures may not conform well to various courses of action and approvals common in the procurement field.
  • Cooperation Hindrances: the ERP systems may not provide strong platforms to guarantee smooth cooperation between internal teams and external vendors.
  • Limited spending vision: the standard ERP systems lack the advanced functions for analyzing and managing spending, which limits the data vision in effective time along with strategic decision-making.

I want to warn you of considering potential deficiencies upon evaluating the suitability of an ERP system according to your needs.

In conclusion, within the current work environment, where each decision has a huge force, procurement is the cornerstone of strategic success. Although each association looks continuously for innovative ways to overcome the complications of supply chain management, they find lots of capabilities along with the ERP systems, especially Logix whose “dynamic nature” represents a quantum leap in the procurement field.

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