As anyone involved will tell you, sourcing for your business is a complex and difficult process.
Why is this?
Three typical concerns that always come up for sourcing businesses are –
- Finding the right suppliers: Just like finding the perfect pair of shoes or the perfect laptop for you, finding reliable suppliers that meet your quality, price and delivery needs can be difficult.
- Cost Management: Sourcing involves juggling various costs from raw materials to shipping costs. Also, as procurement scales in your business, the cost of running a procurement team also increases.
- Manual processes: There is a lot of repetitive and operational work involved that is prone to delays, inefficiencies and errors.
An Enterprise Resource Planning (ERP) software is a platform that integrates and potentially automates various functions of a business or process into a well-packaged solution. It brings together all your disparate business activities—such as finance, inventory, and human resources—into one interconnected system.
ERP for procurement
If your business uses an ERP, you may know that most well-rounded ERPs today provide a dedicated module to facilitate, organize and centralize most procurement processes.
Examples of ERPs that provide procurement modules –
- SAP S/4HANA
- Oracle ERP Cloud
- Microsoft Dynamics 365
- CloudSuite Information
- Epicor ERP
This means that most procedures subject to commissions such as
- supplier onboarding,
- contracts,
- stock management,
- creating a purchase order,
- invoice processing,
can be addressed through the right ERP module.
This digitized ecosystem ensures that finding and onboarding the right suppliers is seamless, cost management is easier due to full spend visibility, and manual effort is reduced by using a few automations.
ERP for procurement automation
Today, artificial intelligence and workflow automation have paved the way for the complete automation of the procure-to-pay process.
Dedicated procurement automation software such as Nanonets use it to streamline the procurement process, leading to –
- automation of manual tasks
- Errors and delays associated with manual processes are eliminated.
- cost savings result as software fees are drastically less than manual labor costs.
- better approval processes
- automated expense policy enforced on workflow
- accurate real-time analytics
- better supplier performance management
- better spending visibility
Any procurement automation software today offers ready-to-use integrations that integrate with your ERP to ensure a seamless procurement workflow.
While ERP procurement modules themselves have some automation capabilities, these capabilities are not able to facilitate complete automation of the procurement to payment process. How come;
- Integration Complexity: Many ERPs require manual data entry or intervention at various stages, such as during invoice reconciliation or purchase order approval, which disrupts the seamless flow of automation.
- Customization Needs: Your business may have unique workflows (eg vendor-specific workflows) that cannot be configured using standard ERP functions, and asking for customizations there is always costly.
- Approval procedures: While ERPs facilitate approval workflows, the lack of customization and flexibility in handling complex approval hierarchies is a problem. Also, implementing your expense policy is a pain.
- Manual data entry: Many ERPs lack advanced OCR capabilities to capture invoice data, leading to manual data entry and processing delays.
- Invoice Matching: Legacy ERP systems cannot perform 3-way matching.
To fully automate the procurement to payment process, businesses need to complement their ERP systems with procurement automation software. This partnership ensures full automation of procurement.
Do you need ERP in Procurement?
Businesses operating on a smaller scale may not see the need to invest in ERP procurement modules, which is fair.
Direct use of a procurement automation software is the best bet in such cases. Here’s why –
- The procurement module of an ERP would usually be quite expensive compared to a procurement automation software subscription. Many of these softwares have flexible pricing plans that adapt to your business activities.
- Your procurement automation software can still integrate with your ERP modules such as finance, inventory management, etc.
- Implementing a procurement automation tool is often much faster and simpler than developing an entire ERP module. This means you can start seeing the benefits of automation almost immediately.
- Ongoing support and regular updates can be a huge plus for smaller businesses that don’t have extensive IT resources themselves.
What does Procurement Automation look like?
See how procurement automation software like Nanonets can transform your workflow –
Purchase request: Employees can easily submit online purchase requests through the Nanonets portal.
Create Purchase Order: Nanonets simplifies the process by automatically creating a purchase order (PO) based on request details.
Purchase order approval: In Nanonets, the PO goes through an automated approval workflow. You have the option to define predefined rules and conditional checks to ensure consistency, reduce errors and prevent unauthorized spending.
You’ll receive approval notifications that you can easily manage with popular communication tools like Slack and Microsoft Teams. These notifications even include direct calls to action (CTAs), making the process simple and helping you make quick decisions.
Send purchase order: Once approved, the system automatically sends the PO to the supplier via embedded email or a supplier portal such as SAP Ariba or Coupa.
Delivery of goods or services: The supplier processes the order and updates the delivery status on their portal, which is synchronized with Nanonets.
Get and match invoice data: Nanonets automatically extracts data from invoices, purchase orders and delivery notes, reducing manual entry and errors.
To ensure accuracy, automated triple matching is performed by comparing invoices, purchase orders and delivery notes before processing payments.
Payment processing: With Nanonets, you can enjoy seamless payment processes, ensuring that all transactions are completed efficiently and on time.
Integration with ERP/Accounting Software: Nanonets integrate seamlessly with various ERP and accounting systems, providing a unified procurement and financial data management experience.
By automating your procurement workflow with Nanonets, businesses can ensure seamless data flow across multiple applications, reduce manual errors, save money and improve the overall performance of their procurement cycle.