Sure, purchasing takes up a good chunk of your time each month, but do you really need procurement software? If you do, it will be hard to choose one package. There are so many solutions on the market; at first glance, they don’t look all that different.
Choosing procurement software shouldn’t be an arbitrary—or overwhelming—decision. We’ll break down how to determine whether you need the software, the differences between market leaders, and how to confidently decide which solution is best for your business.
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How to know if you need procurement software
Procurement software saves time and money for businesses of all sizes and reduces business-continuity risk. But like any software solution, the software is an expense in itself. So how do you know whether it’s worth the investment?
While we don’t have an exact formula for you, below are a handful of scenarios that indicate that procurement software will produce an overall cost savings for your business.
You spend too long on sourcing (or don’t have time for it at all)
Businesses spend too much time on sourcing supplies for two reasons: They’re trying to keep costs as low as possible, or they have to adhere to strict quality or compliance requirements. Others forgo the process entirely because it’s such a time suck. The first group loses time that could be spent on more strategic work. The second is probably overspending.
It doesn’t need to be a lose-lose proposition, though. Procurement software can perform strategic sourcing so that you don’t have to spend hours tracking down prices and product specs from dozens of vendors. The right procurement software will automate cost comparisons; recommend products according to your geography, price, compliance, or other specific needs; and automatically offer alternatives if your preferred supplies go out of stock.
Your purchasing process is fractured
Businesses that purchase from multiple vendors can end up with a fractured purchasing process. They have to remember dozens of passwords for vendor portals, stay on top of reorders, keep track of multiple deliveries, etc. These fractured processes waste time and can lead to inconsistencies across locations. What’s more, businesses that purchase in this haphazard way miss out on opportunities for cost savings by creating economies of scale and buying in bulk.
Procurement software creates a more efficient purchasing process by streamlining purchasing into one centralized portal. When you log into procurement software, you’ll be able to add all of your preferred vendors, so you can order from all of them at the same time. You can also automate routine orders so that you never have to worry about submitting an order on time again.
You process dozens of vendor invoices each month
Ordering from several vendors results in a huge stack of invoices for accounting teams to track and process every month. Books become disorderly, and some purchases go untracked entirely. Analyzing and reporting on spend feels like a nightmare.
The right procurement software will reduce the number of invoices you produce by centralizing your purchases. Negotiatus client ZeroCater reduced their invoices 50x over, going from hundreds to three or four a month.
That probably sounds like a dream to your accounting department. Wait until you tell them that procurement software can also automate approvals and code purchasing upfront, making month-end close a cinch. Procurement software can also centralize spend across the organization by allowing users to upload miscellaneous invoices or receipts. This capability ensures that the reporting and spend analysis are always accurate and easy to perform.
Your business is leaking cash from maverick spend
Maverick spend, or spending outside of your preferred supplier list and company spend policy, can account for up to 80% of a company’s total spend, according to CIPS. If your business is leaking cash from maverick spend—or you suspect it is—you have a huge opportunity to increase your profit margins.
By bringing structure to your purchasing process, procurement software guards against wasteful or non-compliant spending. The software simply won’t allow employees to complete a purchase that is noncompliant, eliminating the possibility of unapproved spend.
You’re exposed to business continuity risk from vendor errors
Your business operations are put at risk if a vendor runs out of stock, gets your order wrong, or fails to deliver your order on time. If you’re routinely running out to buy supplies that didn’t arrive as planned (at a higher markup, no less), procurement software can help.
The right procurement software will automatically find replacements for out-of-stock items so you can quickly transition your order to a new vendor and avoid delays. It will also track deliveries and alert you to any delays, giving you ample warning if a shipment won’t arrive on time.
If none of this resonates, then you probably don’t need procurement software just yet. But if it does resonate, keep reading. Your business will benefit from procurement software, and we can help you choose the one that will deliver the highest ROI.
How to choose the right procurement software
If you’ve determined your business will benefit from procurement software, we can help you choose one.
Start by considering the unique procurement challenges your business faces. Then, learn what distinguishes the market leaders from one another so you can narrow down your search. Finally, use a decision matrix to select the best software for your business’s unique needs.
Identify your procurement challenges
Knowing your challenges will help you better understand what you need from procurement software, allowing you to distinguish features you need from nice-to-haves.
Make a list of these challenges, and then rank that list in order from most to least important. Now you can go into product demos with confidence and clearly articulate to sales representatives what you want from a software solution.
Understand the differences between leading providers
So which procurement software should you demo? Fortunately, you have an array of comprehensive solutions to choose from. While any of them can improve your purchasing process, however, only one is the best fit for your business.
Here’s a breakdown of the market’s leading solutions by features and benefits.
Set up demos and use a decision matrix to determine the best fit
Once you demo the procurement software providers that best match your business’s needs, use our decision matrix to score each solution. The matrix allows you to make a scientific, quantifiable decision rather than act on impulse.
Note, while the matrix already takes budget, savings goals, and comfort with a product into account, you might want to add or remove some questions. Doing so will ensure that the outcome reflects the specific challenges and needs you identified.
Save time and money on procurement
Digital procurement tools decrease a company’s annual expenditures by an average of 5-10%, according to a study from BCG. If you’ve determined Negotiatus might be the best procurement software to help your business achieve those savings, we’d love to hear from you. Get in touch or request a demo.