Despite more CPOs reporting directly to CFOs, as well as lots of talk about the importance of synergy between procurement and finance, many organizations still keep these functions in very distinct silos. If your organization has more space than you’d like between the two departments, the good news is bringing them together can be a relatively smooth process. A big part of why organizations can find a lot of success by bringing procurement and finance into closer alignment is the two departments already have a lot in common. So with that in mind, here are a handful of steps that can be very useful in encouraging successful collaboration:
Regardless of the size of a company or its specific industry, the activities of procurement and accounts payable impact each other. Because of this link, a company’s goal should be to maximize the efficiency of both departments. Doing so has very clear benefits, especially in regards to the procure-to-pay process.
One of the best ways to reap all of those benefits is to automate procure-to-pay activities. Purchasing automation offers efficiency and speed improvements that simply aren’t possible through any other means.
Automation directly impacts procurement staff. Once automation is introduced into this environment, it provides procurement professionals with what they need to operate at a higher level of both efficiency and productivity. What’s even more appealing about those gains is they can then help to reduce the staffing costs that go along with processing orders. Instead of spending large amounts of time on basic tasks related to the purchasing process, members of this department can focus their attention on activities that create far more value.
Key Benefits of Procure-to-Pay Automation
Once procure-to-pay processes are automated, a business will notice faster cycle times. The second notable benefit of purchasing automation is increased efficiency for purchase order processing. Because an automated system takes care of routing information in the most efficient way possible, previously wasted time caused by communication inefficiencies is eliminated.
The third benefit that’s very meaningful for businesses is that procurement employees are able to process significantly more purchase orders. That benefit stems from purchasing automation directly assisting with common tasks like purchase order generation.
Another benefit that goes along with automating procurement is a reduction in supplier lead times. The clear and consistent data sharing provided by automation ensures that suppliers have everything they need to avoid delays.
Moving Towards Purchasing Automation
Once businesses learn about all of the benefits that procurement automation has to offer, they generally want to learn more about what it takes to make this transition. When this topic comes up, it’s generally a good time to review the current strategy that’s in place for managing procurement. Looking at the current state of areas like receiving and invoicing provides an opportunity to identify key areas for improvement.
The good news about purchasing automation is not only is it very beneficial, but it’s easier to implement than many companies expect. With the right purchase order software, companies can get all the features they need. From customized work flows to purchase order generation, quality purchasing software puts all the power of automation into a straightforward interface.
One of the reasons that procurement has moved into the corporate spotlight in recent years is because more organizations are realizing the direct impact it can have on profitability. Thanks to that direct impact, companies are putting a lot of focus on ensuring that the fundamentals of procurement are being handled in the best way possible. Although it’s frustrating for a company to learn that suboptimal procurement practices have been costing them money for an extended period of time, the upside is that once these issues are addressed, a business can get on the right track and stay there as they continue to move forward.
When a business starts looking into their existing approach to procurement, one question that often comes up is what fundamentals need to be in place in order for everything to operate as efficiently as possible. As we’ll see shortly, there are actually several answers to that question. The link that ties them all together is the need for them to be manageable and scalable. While best practices are important, they only have an impact when there is a reliable way to utilize them daily.
Purchasing Software is the Best Way to Optimize Procurement
Since most procurement departments can tell stories about things getting off track despite having strong guidelines in place, purchasing software is a welcome solution for small and mid-market businesses. What makes this kind of software so powerful is it can take the procurement practices your business wants to follow and ensure that they are in place on a daily basis. And because this type of software is so easy to use, your entire business will be able to enjoy both optimal procurement practices and maximum productivity.
Because this type of software has the ability to deliver very big benefits, many people want to know exactly what kind of features it offers. The first key feature is the ability to automate purchasing processes. Not only do customized work flows greatly increase efficiency, but they also eliminate the need for procurement departments to use large amounts of paper.
The second important feature of purchasing software is being able to set and actually enforce budget thresholds. Instead of constantly being distracted by maverick spending, purchasing managers using quality software can focus on the tasks that will have the biggest impact on their company’s bottom line.
Several other features worth mentioning are the ability to use this software without IT support, having access to historical data to leverage vendor pricing and excellent usability that makes it easy to get everyone within a company to start using the software. The combination of all these features is why purchasing software is a great fit for any company that wants to enable procurement to play a direct part in growth.To see all the features we just covered in action, be sure to head over to our Free Live Demo page or sign up for a 30 Day Free Trial- no credit card needed.
Whether it’s energy or any other industry, executives who have made their way up the ranks over the past three decades know from personal experience just how far purchase management has come. It wasn’t that long ago when procurement was often more of an afterthought for companies than anything that would be viewed as a core competency. However, as global markets have changed and technology has increased competition, more businesses of all sizes are taking a more in-depth look at their purchasing processes.
Running a successful procurement department isn’t something that generally happens overnight. In order to get this department to an optimal position, it’s important for there to be clear goals in place. In addition to setting clear goals for what the department should focus on achieving, it’s also important for everyone who works in procurement to be aware of common mistakes. By knowing what’s most likely to go wrong, every member of the team can keep an eye out for procurement mistakes and correct them if they ever come up.
Since we are in a position that allows us to speak with purchasing managers and other procurement professionals on a regular basis, we want to share the most common mistakes that have been brought up to us:
This mistake is especially common in new businesses. And even if a business is established, it can still happen if the procurement department has just gotten up and running. The most common reason that rushed buying happens is because a company or its procurement department feels like they need to get everything ordered as soon as possible. While securing what’s needed in a timely manner is important, that doesn’t mean the procurement process should be thrown into overdrive. By focusing on a striking a balance between thoroughness and promptness, procurement departments can do an optimal job.
Not Being Flexible with Plans
It’s definitely good for procurement departments to have plans in place. Not only can this keep things moving along, but it’s also a great way to avoid common obstacles. While there are clear benefits to planning, that doesn’t mean members of a procurement department should be tied to a plan forever. Since conditions can change, it’s important to review plans on a regular basis. By making reviews part of a team’s culture, the department won’t have to worry about getting stuck in any negative patterns.
Failing to Negotiate
Although we’ve already talked about negotiating on the blog, it’s a topic that’s worth bringing up again. Even though most procurement departments are conditioned to look for deals, far too many completely overlook the possibility of negotiating. Simply put, as long as it’s done in a reasonable manner, there’s no reason that purchasing managers shouldn’t negotiate.
Making Major Decisions in Isolation
One of the roles of a procurement department is to keep things moving along smoothly for the entire company. While it doesn’t make sense to seek input for every purchase, there are times when the department should loop others into the conversation prior to making a final decision. By opening up the lines of communication, a procurement department can avoid the wasted time and resources that go along with making an incorrect decision that then needs to be corrected.
We’ve recently written about the fact that many purchasing managers don’t negotiate at all when they speak with suppliers. We have also gone over some of the strategies that purchasing managers can use to successfully negotiate with suppliers. While this has allowed us to cover many of the best practice for procurement negotiations, there’s still another topic that we want to touch on.
Although many procurement departments don’t negotiate, there are those that make negotiations a standard component of how they run. However, just because a procurement department has a standard process for negotiating doesn’t mean that they’re doing things in an optimal way. Forbes recently covered a common mistake that’s made by procurement departments in the logistics space and other industries.
Not Knowing When to Give a Little
The negotiation mistake that the Forbes article addressed was procurement departments getting too aggressive with their terms and conditions. Specifically, this is an issue that has started to become quite widespread over the last few years. The problem with this trend is instead of using the industry standards that have been in place for a long time, companies are making the decision to come up with their own rules and contract terms. By doing this, they end up putting an unreasonable amount of risk on their service providers and carriers.
So, what happens when procurement departments put themselves in this position? Although they may be operating under the belief that they’re in control, the reality is that taking an overly aggressively stance can negatively impact the leverage that a purchasing manager has during the course of negotiations. Once a supplier realizes that they’re dealing with a department that has unreasonable demands, they’re going to be far less motivated to make the deal work than if they only had to meet in the middle on more reasonable terms.
How to Remedy This Problem
Since this trend has become a noticeable issue, many companies are looking for ways to remedy it. The good news is there are several steps that can be taken to get negotiations on the right track. The first is to hire and train the right candidates. By ensuring that purchasing managers understand the optimal approach to negotiating and have the skills to carry out this process, aggressive tendencies can be eliminated.
The other step that companies should take is ensuring they cultivate a culture that’s focused on a long-term vision. While it is true that really squeezing the terms of a deal can seem like a win, any gain is only temporary. If a company wants to build a mutually beneficial relationship that will help it thrive over the long-term, this is a mission that needs to be shared with everyone in the company.
Let Bellwether Purchasing Software help your company improve supplier neogtiations with our flexible and comprehensive purchasing software. Contact us today to see why Bellwether Purchase Software is the software to choose.
While there’s no denying the fact that technology is now everywhere, that doesn’t mean it always lives up to its promises. Most businesses have gone through the process of getting excited about a specific piece of technology, only to have it fall short of the claims it makes. Because this can cause a business to invest time and resources into a solution that ultimately ends up not working out, plenty of businesses have a healthy dose of skepticism about adopting any new types of technology.
Although this outlook on things is completely understandable, it’s important for businesses to maintain the right perspective about technology. Despite some bumps along the way, that simple reality is that modern business is driven by advances in technology. Since technology is the best way for businesses to save time and money, businesses that constantly adopt the right solutions are able to gain a significant advantage over their competitors.
If you want to ensure that your business stays at the forefront of its industry instead of being at risk of falling behind, it’s important to be open to utilizing technology solutions with a track record of saving time and money. One solution that falls squarely into this category is to have your purchasing department automate. Even though it wasn’t that long ago when businesses had no choice but to manually process purchasing orders, that’s no longer the case.
And given the fact that manual processing has significant costs and resource requirements associated with it, this is something that businesses should automate as soon as possible. If your business understands the savings benefits associated with this form of processing but is concerned that implementing this type of system is going to be a major undertaking, you’ll be happy to know that Bellwether Purchasing Software offers a simple but powerful solution.
The Ideal Automation Solution for Small Business and Mid Market Purchasing Managers
The reason that Bellwether Purchasing Software has such a good track record is because it was specifically designed with small business and mid market purchasing managers in mind. Since it was built to make it possible to easily automate purchasing processes and eliminate paper, it has all the necessary features without any unneeded bloat.
Because our software was built with user friendliness in mind, it shouldn’t come as a surprise that it is incredibly easy to get up and running. Thanks to its availability as a secure SaaS solution, purchasing managers can fully use Bellwether Purchasing Software without needing to pull IT away from their other responsibilities.
Requisitioning, approval processes, PO generation, receiving, inventory, invoice matching and reporting are all features of our purchasing software. So if you’re ready to enjoy all the benefits of upgrading purchase order processing from a manual process to an automated one, contact us today.
As anyone with any amount of purchasing negotiation experience will tell you, this practice is part art and part science. While purchasing negotiation may seem a little intimidating at first, the most important thing to remember is it’s something that anyone can learn. Although there are people who make this process seem like magic, the only reason they’re able to do that is because they have so much experience with it. So as long as you’re willing to practice how to negotiate with suppliers on a regular basis by actively engaging in the process, it will likely take less time than you expect to get very skilled at it.
What’s the Key to Successful Purchasing Negotiation?
As mentioned above, a big part of purchasing negotiation success is practice. Since there are a wide range of scenarios that can come up during this process, it takes a little time to become fully familiar with everything you may encounter. In addition to practice, there’s one other component that can take you a very long way.
That component is preparation. The reason this component can have such a big impact on the outcome of purchasing negotiations is because knowledge really is power. By entering a negotiation with as much information as possible, a purchasing manager can put themselves in the driver’s seat of the negotiations.
Setting the Right Expectations for Different Suppliers
One of the most common mistakes that people make with purchasing negotiations is taking the exact same approach with every supplier. The simple reason a blanket approach doesn’t work is because your business doesn’t have the same relationship with all of its suppliers. That’s why it’s important to classify suppliers into A, B and C categories. By understanding the dynamics of a supplier relationship, you’ll be able to craft the right approach to negotiations with them.
Lose-Lose vs Win-Win
While entire books have been written on how to negotiate with suppliers, the most common approaches can be boiled down into two basic categories. With lose-lose negotiating, all someone cares about is bringing the price down as much as possible. Although saving money may sound like a win, the reason that’s not necessarily the case is because it comes at the expense of things like delivery times or quality.
Even though win-win is the less common form of negotiating, it’s the one that purchasing managers should strive for. While this approach still makes it possible to save money, negotiations are handled in a way that also ensures other aspects like quality and delivery are done in the best way possible.
Since getting really good at purchasing negotiations takes practice and time, you may be looking for a way to free up more of your time to focus on this very valuable activity. If that accurately describes your current situation, find out how Bellwether’s Purchasing Software can give you the additional time you need to hone your negotiation skills. Contact us to learn more today.
A PunchOut provides a way to connect directly to vendors’ catalogs. By using a procurement software to set up PunchOuts, buyers have the ability to order directly through the web. Given all the benefits that this type of system can provide, it’s not surprising that usage of PunchOuts has seen an increase of 31% over just the last year.
While that is a notable amount of growth, many businesses still aren’t utilizing this system. When asked why, one of the most common responses is that businesses are concerned that the process of setting up this type of system is going to take too much time or require a large amount of resources. Although it is true that some setup is required, the process is simpler than most businesses expect. And given all the benefits of having PunchOuts in place, it’s an investment that businesses end up being very happy they made.
Whether you’re already on board with this concept but need some concrete points to help build your case or you’d like to know more about exactly what can be gained from PunchOuts, we want to take a look at look at the exact benefits that this practice can provide to a business:
No Maintenance Required for Purchasers
Once you get PunchOuts set up, you won’t have to worry about any ongoing maintenance. The reason is because any required catalog maintenance will be handled by the supplier. Since this isn’t something that your business will have to spend time doing, it will save you both time and money.
More Detailed Information
Not only are PunchOut catalogs really convenient, but they’re also very useful. Since being online means it’s easier for suppliers to properly maintain these types of catalogs, they provide purchasing managers with more detailed information. From current discounts to correct shipping costs, the fact that suppliers can do real-time updates is something that’s quite helpful for buyers.
Centralized and Simplified Purchasing
In addition to concerns about setting up PunchOuts, one of the other hesitations that purchasers have is that this system will get in the way of them being able to negotiate. However, thanks to the fact that negotiated prices can be hooked directly into the system, PunchOuts actually provide a way to promote purchasing consolidation, which in turn helps to maximize spend management.
Save Time and Increase Productivity
Since most purchasing managers already have a lot on their plate, there’s no reason that they should be spending their valuable time trying to navigate broken systems. By making the transition to PunchOuts, buyers will be able to save time, increase their productivity and focus their energy on the types of tasks that will have a very positive impact on the business as a whole. Bellwether Purchasing Software can help you make this transition easier. Contact us today to learn more.
One of the things we’ve noticed over the course of working with a wide range of purchasing managers and suppliers is that the majority of purchasing managers don’t negotiate. This observation is based on our own experiences, as well as conversations with numerous suppliers. While suppliers aren’t complaining about the fact that more purchasing managers aren’t trying to negotiate, almost all of them have made it clear that they would be open to negotiating a deal.
Since this trend marks quite a bit of missed opportunities for most purchasing managers, we want to cover some tactics that any purchasing manager can use to easily negotiate more of their deals:
Take Time to Prepare
Research has found that 62% of people who engage in negotiations spend less than 60 minutes getting prepared. While that may not seem like a very big deal, the reality of negotiating is it’s all about how you go into this situation. Without proper preparation, the experience is going to be much more stressful than necessary. By taking the time to do all necessary research and really get yourself ready for the conversation, you’ll find that you have the confidence needed to be highly persuasive.
Utilize Open Questions
Because negotiations can take many different forms, there are numerous strategies that someone can utilize during the course of striking a deal. Open questions are one of the most underutilized forms of negotiating. The reason this type of question works so well during a negotiation is because it puts you in control by making it very difficult for the other party to evade what you’re asking.
Know What You’re Trying to Accomplish
Although this may sound obvious, plenty of people enter into situations involving a negotiation without first defining their specific objective. Since negotiations are all about give and take, it’s generally best to set an ideal objective, as well as a realistic objective. And depending on your willingness to work with a supplier, it may also make sense to have a walk away limit.
Don’t Be Overly Competitive
While negotiating can provide you with a rush of excitement, that doesn’t mean you want to get too caught up in the competitive aspect of this tactic. When people enter a negotiation with the outlook that they’re going to win every single deal point, they end up sabotaging what could have otherwise been a very positive experience for both parties.
As you can see from the above tactics, negotiating is a skill just like any other. As a result, it can take some time to feel really confident as a negotiator. But as long as you commit to negotiating and make an effort to continuously improve, you’ll be very happy with the results that you begin to get from this practice.