Best Procurement Software

A concrete procurement process is mandatory for a business to perform consistently and avoid excessive spending on goods.  But the procurement process is not simply about purchasing goods or raw material for running a business but primarily includes planning the resources strategically for its optimum use.

A poor procurement process can leave a big dent in the organization’s financial structure and can easily throw them out of business.  The procurement process is often referred to as a tactical function as it involves many intricacies for procuring goods.  Right through negotiating with suppliers till the end of their contracts, the procurement process includes many details. An organization must equip them with the best procurement software to enhance the efficiency of their procurement process without missing out on any single details.

This buyer guide is created to assist business owners, procurement managers, purchasing managers, and supplier managers in getting an in-depth idea of important aspects of the best procurement software and all the essential factors that they should consider before buying the software.

• Direct: Direct procurement is the process of acquiring raw material and goods for production. It is generally produced in large quantities at the best possible cost, quality, and reliability. The direct procurement method invests a lot of effort and time into developing and maintaining relationships with the supplier.  Direct procurement is spending on goods, services, and materials that drive profit, performance, and competitive advantage.

• Indirect: Indirect procurement is referred to the acquisition of services and goods that aren’t connected directly to a product or services.  It includes goods needed for day-to-day operations, facilities management, maintenance, transportation, office supplies, etc. In indirect procurement, the focus is mainly on spend management, not vendor relationship benefits.

Here are a few tips that one can follow to take your organization closer to the idea of “Procurement with purpose” formula:

• Increase bottom line-growth: Any organization that aims to improve its financial stability generally can focus on the “bottom-line growth.” The bottom line growth determines how efficient a company is with its spending and managing the operating costs. 
• Value addition: A strong procurement strategy ensures the business is equipped with the best quality goods and materials. During the business need identification, the organization collects critical information about supplier’s goods like product make, required quantity, required quality, supply at the optimum price, most efficient vendor, etc. All these activities eventually help to improve customer service and add value to the brand.
• Risk awareness: The procurement process helps the organization identify the supply chain disruptions and minimize the risk associated with it.
• Controlled spend: Without stagnating your team, you can easily control your spending. Procure only based on the demand.
• Prioritize what matters: With a proper procurement process in place, the business owner or procurement team can prioritize their purchase order.

• Takes more time and money:  The traditional procurement process like ordering goods, taking approval, making payments to suppliers, etc., takes time as most of these processes involve paper documents. A simple method of collecting supplier’s bids and filtering them to business requirements may take several weeks.
• Data management:  The traditional approach involves lots of paperwork, and managing those records manually could be a challenging task. It gets even worse when some documents are misplaced or have to extract certain information from the stacks of files.
• Excess order: Tracking the goods in-stock manually may not be accurate, leading to the wrong amount of goods ordering.
• Delay or missed payments: For big enterprises where an organization may be dealing with hundreds of invoices daily, the traditional procurement method may put extra work on the finance department.  Since the traditional procurement is uneven, the same could be reflected in the payment process. The supplier’s payment may get delayed or missed. Besides that, occupying the staff to find the negligible dollar variance between a purchase order and invoice may affect productivity.
• Not identifying suppliers’ capabilities: For a smooth procurement process, it is essential to understand the supplier’s true capabilities.  Placing unrealistic expectations from suppliers such as fulfilling procurement orders in any amount and at any time may not be feasible.  In manual procurement, it is quite difficult to analyze a supplier’s stocking and his supplying capacity.
• Unable to detect the error:  The manual procurement does not have a centralized data or robust system to record the transaction details.  If there is any error, then it would be difficult to trace it.  The untraced error may sometimes bring big trouble for an organization.
• Zero transparency:  In the traditional procurement process, everything happens on paper, so it is difficult to detect the fraud or malpractice occurring within the organization.
• Poor Vendor Selection:  One of the biggest challenges associated with procurement is selecting a quality vendor.  If the organization does not have a method to evaluate the supplier’s quality, there is always a probability of choosing the wrong vendor.
• Improper Communication: For organizations looking to keep control of excess spending, it is necessary that there is smooth communication conducted between the teams, especially between the procurement department and the finance department.  Any miscommunication between these two departments may lead to cash leakage. With traditional techniques, the probability of miscommunication always remains high and is not effective for a dynamic work environment.    

Procurement software is a set of tools that helps an organization in the smooth acquisition of goods and services. Procurement management software can assist in various activities like generating purchase orders, match invoices to materials received, execute the ordering process online, and pay all bills electronically.  It also offers a set of features that facilitate communications with a large number of suppliers. 

Various organizations have begun using online procurement software as a strategic arm rather than a simple purchasing tool. The online procurement software for B2B, B2C, and B2G is generally provided as an additional service by large ERP providers or as a standalone system by procurement software vendors.

• Improved supplier performance:  Effective procurement tools help to manage supplier’s information and related activities with ease.  It means multiple sets of data to work with suppliers; whether it is monitoring their contract information or extracting product information from the catalog, everything gets simple. All these pieces of information can be used to improve the supplier’s performance.
• Cost-saving on inventory management:  Part of the procurement is to check the goods stock and automatically re-order the missing products. It eventually takes the burden from the organization to manage the inventory and allocate separate staff to look after the inventory-related tasks.
• Digitize procurement documents: Procurement management software enables users to digitize their procurement process and replace the paper documents. The e-documents are easy to share and propel the overall speed of the procurement process.
• Data storage: The data storage capacity of procurement software solutions is massive, and users can extract any historical data in a couple of seconds. The procurement solutions companies eliminate all the room for error usually encountered with manual storage systems like damaging the quality of the documents or misplacing it. With cloud-based procurement software, the enterprise can further reduce the burden of storing and managing the in-house server.
• Analytics reports: The procurement management tool allows collecting data and creating an analytics report that helps the procurement manager analyze the performance of the procuring process and even use it for future forecasting.
• Automation: Procurement automation software optimizes and excels at the speed of everyday workflows.  It speed-ups the process like purchase order processing, contract approval, payment, and tracking compliance.
• Better spend visibility:  The user can get a complete overview of the fund usage and identify the products that are excessively charged.
• Shortened business cycle:  The procurement automation software not only improves the procuring process, but its ripple effect can be seen in the entire business. It helps to shorten the business cycle and increases productivity.
• Centralized control: With the centralized system, procurement solutions have better control over the procurement-related activities, like compliances, contract management, or e-signing some documents.
• Cloud-based procurement software: Some e-procurement software is built on the cloud, enabling all users to access the tool from their mobile phones, laptops, or tablets on the go. Through cloud-based procurement software, the users can share real-time data and can coordinate easily with team members or suppliers from across the globe.

• RFQ creations: RFQ, or Request for Quotation, is a formal document requesting suppliers to submit their quotations. Top procurement Software allows users to create an RFQ template and send them to multiple suppliers all at once.
• Reverse auction:  In reverse auctions, the sellers compete with one another to win the business at the lowest bid price. Thetopprocurement software companiesenable users to place orders with vendors through virtual catalogs in real-time.
• Bid/ Quote submission: The procurement software should be equipped with the rapid short-listing of the suppliers. With electronic bid submission, the business owner can take the entire bid submission and review process online, which eventually reduces the time-span in identifying the right suppliers matching their budget.
• Compliance tracking:  Compliance tracking is a core responsibility of any organization.  With procurement management tools, the users can report and track regulation changes automatically as they occur.  It helps to identify and eliminate any gap in the supplier’s contract compliances.
• Risk assessment: The procurement department can face various types of operational, financial, compliance, and industry risks. By boarding comprehensive procurement software solutions, the users can determine how likely they will occur and their effects on efficiency, operation, and bottom line.
• Vendor selection and management: The procurement software companies ensure that their software users get the best suppliers and services without investing their valuable time. The top procurement software comes with the automation feature. It helps to choose the right suppliers and evaluate the quality of the vendor service automatically.
• Product catalog: The procurement system with a product catalog helps the purchasing department compare different products from various vendors and decide the most suitable option.
• ERP/EDI Integration: Electronic Data Interchange, or EDI, is a standardized approach of exchanging electronic business documents. By setting up an EDI integrated solution with ERP, the data between vendors and customers is automated. The procurement system with ERP/EDI integration makes the supply chain more efficient.
• Budget tracking and Spend management: Budget tracking and spend analysis is important in procurement is essential.  It enables an organization to make informed decisions and gives strong financial control.
• Third-party software integration (accounting software): The best procurement solutions support the seamless integration of third-party tools.  It allows users to reap the advantages of a procurement program on a full scale.
• Manage contract agreements:  Better contract management for procurement means greater visibility into the supplier's performance. The procurement system also tracks and monitors spend against contracts with their suppliers and vendors.
• Generate report and analytics: Reporting and analytics in the e-Procurement system give every detail of spending. It can be even used for forecasting the next order or a downward trend against the supplier. The reporting features bring great value to the companies.
• Support multi-level approvals:  Different business units have different authorization steps. With the procurement management tools having multi-level approval, the procurement process speeds up, and production time is greatly reduced.
• Guided Buying:  The procurement software with “guided buying” features direct users to the right items, the right policies, and preferred suppliers. Even the employee that is not involved in the purchasing process can place an order easily.
• Barcoding/RFID:  The online procurement software or app with integrated RFID technology can automatically track the goods and reduce labor costs.
• Transportation management:  Effective procurement demands thorough knowledge of fleet operations. It is essential for procurement and fleet management to coexist and work together seamlessly to ensure that business costs do not exceed a company’s budget expectations.

Procurement software systems are very effective as it offers complete control of the procurement-related activities.

Reports suggest the market revenue for procurement software application will cross 6 million U.S dollars by 2023.  It clearly depicts that more and more organizations are putting their faith in procurement automation software and their clear intentions to use it on a wider scale.  

So far, larger enterprises have covered the procurement software market, but now the small and medium enterprises are also showing the same level of enthusiasm. It is also because now there are procurement software for small businesses that is affordable and user-friendly.

Industry Wise Usage of Procurement Software

The industries like retail, automotive, travel & logistics, electronics, IT & telecommunication, mining, etc., are actively using the procurement program. Among all these industries, the retail sector is holding the biggest market share of the procurement software. 

The e-procurement software is making a big impact in streamlining the purchasing process by assisting them in forecasting cash flow, identifying potential fraud, understanding preferred supplier payment methods, and automating labor-intensive tasks.

There is some overlap between the procurement program and inventory management software; there are few things that separate them from each other.

• Procurement Software: Procurement management tools provide controls on the supply chain upstream of purchasing and occasionally support the downstream. The e-procurement software focuses on purchasing activities like – bid management, order creation, approval, invoicing, and payment.
• Inventory Management Software: The inventory management systems primarily deal with the downstream of purchasing.  It is more about resource planning, product storage, selective product placement, demand/supply balancing, etc.  Inventory management is one of the components of procurement management that brings the entire process as part of the supply chain process.

The integration of both systems can strengthen supply chain management.

Yes, the procurement management system is safe and secure to use.

The procurement tools may deal with many confidential data like supplier contracts, financial information, and many P2P transactions. Besides that, the automation of supply chain processes has almost eliminated human intervention, and a large set of data are handled by the machine itself. However, users must choose the procurement solutions companies that abide by the necessary compliances that are embedded with multiple layers of security.  The procurement management system should have features like alerts or notification to inform the software users about the possible hacking attempt. The security of the procurement management system can be further enhanced by training the staff and encouraging them to follow the standard security measures. 

While those users who are using free procurement software, it is possible they have weak or no security measures. If the security is not strong enough, then the free procurement software users can practice some preventive measures like limit the user’s access or block unauthorized access to avoid the security threat.   

• Price: Pricing is an important factor the buyers should consider before buying it. The high-range software comes with advanced features, but it is not necessary that all businesses need these features. The procurement tools buyers should align their requirements with the software features, and based on that, they can choose the software. In case if the users have very limited use, they can even use the free procurement software.
• Scalable:  The scalability of procurement management software allows the company to handle the changing needs of the business.  
• Customizability:  Some businesses have precise needs, and it may be possible they have to customize the procurement tools to their requirements.
• Installation requirements:  Some procurement software needs certain resources to run the program. The users should check the software installation guide or discuss it with the procurement software vendors before buying it.
• Customer support: The procurement software users should ensure that there is robust customer support available to solve any technical glitch linked with the software. The procurement software for small business may come with limited options for customer support.
• Smooth integration:  It is necessary for optimum use of procurement software solutions that support end-to-end integration with the other standalone software like warehouse management software or accounting software.

An individual can see a great variation in the pricing of the procurement software; it may be due to the range of features and level of intricacy procurement solutions companies cover.

• Low range: The startups or small business enterprises running on a stringent budget can consider the free procurement software or the low range tools like TYASuite with a price range of $10/month. The basic version offers a free trial. The other option is CommonPage, with a price range of $9/month, and its basic version comes with a free version.
• Medium range: The users that are lenient on their budget can try tools like ProcuMan with a price range of $129/month that comes with the free trial, or Gluh that has a starting price of $199/month.
• Premium range: The business enterprises that are keen on investing in all-in-one solutions interlaced with advanced features, then 3rdWave is a good option with a price range of $1995/month. The user can also consider premium range software like ProjectTools Procurement with a starting price of $897/ month.

In addition to the ones discussed above, if you are looking to develop your own version of the best procurement software, then have a look at the best free and open source procurement software. The open source procurement software are popular because they are less expensive and do not have any up-front licensing fees, but besides the cost factor, the open source procurement software are feasible to use as it is independent of software vendors, competitive features, and high adaptability.

GoodFirms is an unbiased review and rating platform for IT solutions. It has been listing thousands of IT products to help consumers compare and choose the best solution for their domain or industries.  The platform has been helping visitors understand any software on a ground level.

When it comes to procurement software vendors, GoodFirms' list of the best procurement software covers a wide array of companies, along with their reviews and features. Not just big enterprises, but the platform also provides a range of options for the users looking for procurement software for small business. One can easily refer, compare, and choose the right procurement software companies that fits the business and the budget.