Req-to-PO automation is an essential part of effective operative procurement. With the help of these tools you can easily manage your requisition processes from (static catalogues, integrated web stores and even submit free text requisitions.) Approvals and POs across the entire hierarchy can be completed easily with a few clicks. You can also manage your signed contracts in the contract lifecycle management from the beginning of a project to appointing your vendors, and of course, long-term electronic archiving following that is now an inseparable part of process automation.

Catalogue management

There are two types of catalogues that are used in operative procurement: static and dynamic catalogues.

Static catalogues are updated by the suppliers from time to time and sent to the buyers. Procurement professionals (or category managers) mainly receive the updated catalogs via email (in Excel files) and have to check it before making them available to their colleagues. It is a difficult and slow process to match every price with its item or PO number, and the contract. After checking and validating the data, static catalogues are uploaded to the mutual database where all buyers can order consistently within the frame contracts.
Dynamic catalogues are provided by the suppliers, but displayed on their websites. These integrated online stores contain all the items according to the frame contracts, and provide customized access to buyers. However, the person in charge of procurement (or category manager) randomly checks the prices and conditions, while the supplier provides the functionality and operation of the catalogues, in addition to managing all the data in the stores. Even though static catalogues are much more common, dynamic catalogues are gaining popularity and show a growing tendency.

PO management

Items chosen from catalogues don’t always satisfy the buyer’s needs, so procurement systems have to provide free-text requisition options as well. For example, ordering mugs with unique logo on it as a promotional gift, cannot be ordered from standard catalogues, because it contains several unique pieces of information that cannot be specified in general (logo, color, size, number, e.t.) As a best practice, these types of electronic order requisitions go through a two-level approval process: a professional approval decides if the requisition is based on real needs, while a controlling approval checks if it has financial coverage.
Different types of approval chains can be determined by several aspects. A fully approved order requisition is transformed to a PO and electronically forwarded to the supplier, while it is saved in the buyer’s ERP as a conditional commitment. In ideal cases – if the supplier has a developed logistic system – vendors send back an advanced shipment notice as an automatic answer to sign that they received the order. In some contracts it is accepted as a completion certificate.

Invoice matching

Why should a company use an automated system for operative procurement?
Obviously, there are several advantages of these systems, but the biggest added value, undisputedly, is knowing the company’s commitment before receiving the supplier’s invoice. Every step of this commitment can be easily recognized, stakeholders and responsibility can be identified, so the company can avoid every misunderstanding in connection with the invoice. This way the received invoices and completion certificates are totally matched with the data of the PO and order requisition, so there is no need to manually approve receiving the invoice. Automatic matching means that the data of procurement history, completion certificate and invoice are compared to each other, all which can result in significant cost savings at companies that have a 50% or higher share of invoices with a procurement history.

Contract life cycle management

According to our experience, even the world’s biggest companies have problems with archiving their electronic contracts correctly. Also, this is not the worst issue. Before signing a contract there are several steps, and the importance of these steps are not always recognized. The process starts with a needs assessment, is the company looking for potential suppliers or wants to replace the old ones. Before our supplier gets the final version of the contract it may go through different departments in the organisation (legal department, IT, marketing, HR, etc.) Even if it’s a completely new contract or a template, you can be sure that a huge number of versions will be saved loaded with inconsistent data. At the time of signing the contract there is possible to have even 20-30 different versions and that means a high risk for the buyer and the supplier as well. The signed contract is always filed in a folder, in a better case it is scanned and saved in a shared folder on the company’s server. Top players on the market use more sophisticated contract lifecycle management systems to handle their contracts. These systems are not just archiving the documents, but provide access rights at different levels and manage the data in the contract. Integrated contract management systems provide important information to procurement and AP management systems such as contract expiry dates, budgets, cost centers, etc. The contract management system sends notifications to the procurement professionals to renew the contracts, show the controllers the allocated real-time budget of projects and provide an opportunity to search for any data in the contract.