How Technology Can Simplify Operational Procurement

Like many other business functions, operational procurement has been severely tested during recent times. In many cases, this has hampered business operations, given the vital role operational procurement plays in day-to-day operations.

Determining what goods and services are needed, researching and evaluating suppliers, negotiating best prices, maintaining contracts – the workload for operational procurement can be overwhelming.

How can this entire process be simplified?

More importantly, how can businesses get the goods and services they need at the right time and at the right price?

Let’s find out.

What is Operational Procurement?

Operational procurement involves sourcing, acquiring, and managing goods and services from external vendors to run business operations. From identifying the goods and services required to meet operational needs to researching the market and evaluating suppliers, this process can be complex and time-consuming. The involvement of different teams within an enterprise further adds to the complexity.

In this entire exercise, cost savings is a key priority. The key objective of operational procurement is to acquire the goods and services needed in a cost-effective way. It involves assessing the cost, quality, and availability of goods and services, as well as the risks associated with them. Operational procurement also involves negotiating prices, setting payment terms, and managing vendor relationships.

While strategic sourcing takes a long-term approach to purchasing, operational procurement often works in a reactive manner, purchasing materials and supplies as and when needed by the business. It can work in real time and requires a system that supports real-time purchasing and monitoring.

How Technology Can Streamline Operational Procurement

Technology can be used to streamline operational procurement processes. It can automate the entire process and reduce the time and effort required to manage it. In this process, it enables businesses to quickly identify suppliers and negotiate the best prices, while also reducing the risk of errors and associated costs. Automation eliminates the need to manually create purchase orders and track invoices, allowing businesses to focus on more important tasks.

Technology can enhance transparency and provide greater visibility into procurement, allowing companies to better monitor their operations. It can facilitate communication between buyers and suppliers, allowing them to collaborate more effectively.

Technology can also help businesses in decision-making. For example, businesses can use analytics to analyze their procurement data and gain insights into where they can improve their processes.

Technology can also be used to better manage supplier relationships. Businesses can anticipate potential issues with suppliers and take action to resolve them before they become a problem. It can also help to track supplier performance, allowing businesses to assess how well a supplier is performing. In case a supplier is not performing as per the expectation, it can suggest action to improve their performance.

How to Choose the Right Technology for Operational Procurement

Before shortlisting a technology, identify specific areas of operational procurement where you need the maximum help. For example, if you need help with tracking and managing the procurement process, you may want to look for a technology that can automate the process.

When choosing a technology for operational procurement, consider its features, functionality, scalability, and reliability. Also consider its ease of use, as certain technologies can be difficult to implement and may require a lot of training.

Scalability and reliability are also important. The technology must be able to handle your business’s needs as it grows.

Different technologies can offer different features. For example, some technologies may offer features such as automated purchase orders and vendor relationship management, while others may offer supplier performance tracking and AI-based supplier selection. Check if these features can add value to your business.

Finally, check the support offered by the technology. As different technologies may have different levels of support, you should choose a technology that offers the right level of support for your business.