Optimize your procurement workflows: Best practices to save costs and time

Procurement today is much more than just a department that negotiates pricing. In the wake of significant supply chain challenges, it has become a strategic asset for managing supply chains effectively—helping to cut costs, spur innovation, and contribute to broader business goals.

Having a well-defined procurement strategy is essential. It should streamline all steps in the procurement process to enhance efficiency across the board. This approach simplifies operations and allows companies to focus more on strategic and impactful work. In fact, according to Forbes, 61% of business executives have recognized that digitizing workflows can significantly reduce time spent on routine tasks, enabling a greater focus on strategic objectives.

Many procurement departments are embracing automation to implement these strategies. They use e-procurement software, a SaaS procurement platform that automates the entire purchasing process—from catalogue management, requisitions, and purchase orders to invoicing and payments. 

In this blog post, we'll discuss:

• What are procurement workflows
• How to streamline cost and time savings with the procurement workflow 
• Some of the best practices to save cost

What are procurement workflows?

Procurement workflows are essential, systematic tasks within the procure-to-pay cycle. They facilitate data and document flow from initiation to completion of procurement processes. These workflows ensure efficiency and compliance through structured approval rules and task assignments.

A typical procurement workflow includes five key components:

1. Purchase requisitions

Employees initiate purchase requests for necessary products or services, detailing required items, quantities, and delivery timelines. Due to complex approval hierarchies, traditional delays in this stage can be mitigated by streamlining approvals through procurement workflows, thereby enhancing the purchasing team's efficiency.

2. Purchase orders (PO)

After requisitions are approved, a PO is issued as a formal intent to buy, specifying the agreed-upon details about the products or services. This automation helps prevent common inefficiencies acknowledged by approximately 43% of businesses, improving process speed and reducing costs.

3. Invoice approvals 

Automated workflows expedite the invoice approval process by tracking deliveries, calculating taxes, and ensuring timely payments, minimizing the need for manual input and avoiding payment delays.

4. Vendor management

Clear procedures and transparency are crucial for maintaining good supplier relationships. Automation helps procurement teams organize and manage supplier relationships more effectively. By using workflows, teams can address issues quickly and maintain better vendor relationships.

5. Contract approval

Instead of disorganized storage, automated systems organize contract management, making it easier to access and manage contracts effectively, ensuring better compliance and control.

Cost and time savings with streamlined procurement workflows

Time is money, and nowhere is this more accurate than in the procurement process of a SaaS business. By optimizing the flow of procurement activities, companies can achieve significant cost reductions and speed up their operations without compromising on quality or service delivery.

1. Efficient resource management

By simplifying the procurement sequence, companies eliminate unnecessary steps, allowing quicker task completion and reduced resource consumption. Automating purchase requisitions and approvals also frees up personnel to focus on higher-value activities, significantly enhancing productivity. 

SaaS procurement software tools like Spendflo can streamline your intake-to-procure process, centralizing all SaaS purchases in one place for improved collaboration and accelerated procurement through Slack-first workflows, significantly enhancing productivity.

2. Reduced operational costs

Automation is critical in minimizing operational overhead. Automated systems for generating purchase orders and processing invoices ensure both swift and accurate transactions, curtailing budget overruns and reducing the risk of financial errors—key factors in maintaining fiscal health and discipline.

3. Accelerated cycle times

The efficiencies gained through streamlined workflows directly contribute to faster cycle times. This rapid processing capability allows SaaS companies to flexibly adapt to ever-changing market demands, ensuring a steady supply of products and services critical for competitive edge.

4. Strategic vendor relations

Consistent and standardized vendor management practices improve transparency and reliability with suppliers. This strategic approach often results in better negotiation outcomes, including superior terms and pricing, ultimately leading to further cost savings.

Streamlining your procurement workflows

Digital procurement workflows can be streamlined and measured through mutually agreed-upon metrics. Refining these workflows helps companies speed up operations.

1. Automated approvals

Speed is critical in the SaaS industry, where market demands can shift rapidly. Automating the approval process reduces the time spent on manual sign-offs, enabling quicker responses to procurement needs. This system ensures that approvals for purchase requisitions and orders proceed without unnecessary delays, leveraging pre-set thresholds and criteria to maintain control while enhancing pace.

2. Centralized purchasing dashboard

Use a unified SaaS management software dashboard to clearly overview all purchasing activities. It tracks spend, order status, and supplier performance while detecting duplications and shadow IT. This tool immediately identifies redundant apps and unauthorized software, helping to control SaaS spend efficiently and ensuring policy compliance.

3. Supplier integration

Develop direct integrations with key suppliers to streamline communication and transactions. This includes automatic data exchange concerning inventory levels, order placements, and delivery tracking. For SaaS companies, where software updates and server capacity might need rapid scaling, such integrations ensure that supply chains are responsive and adaptable.

4. Regular workflow audits

Conduct periodic reviews of procurement processes to identify bottlenecks or outdated procedures. These audits help continuously refine workflows, keeping them optimal in a fast-paced industry. Implementing changes based on audit results can lead to more strategic procurement practices and better alignment with business goals.

Best practices to save cost via procurement workflow

Here are four of our advanced practices:

1. Centralized procurements

Centralizing procurement consolidates purchasing authority, reducing procurement cycle times and achieving economies of scale. This approach involves leveraging enterprise-wide spend data to negotiate volume discounts and improve supplier contract terms. It also mitigates risks by maintaining consistency in procurement standards and compliance across the organization.

2. Automation and approval

Automating the procurement process through sophisticated software systems can dramatically reduce processing costs and enhance accuracy. Utilizing eProcurement tools integrates artificial intelligence to predict and manage spending patterns while automating routine tasks like PO creation and invoice processing. 

Advanced workflow engines can customize approval hierarchies and automatically route documents based on pre-set rules, dramatically shortening approval times.

3. Data-led procurement decisions

Strategic decision-making driven by robust data analysis can transform procurement from a functional focus to a strategic one. Implementing advanced spend analytics tools helps identify cost-saving opportunities by analyzing spend patterns and supplier performance metrics. 

This can lead to more informed negotiations, better contract management, and improved supplier selection, significantly reducing costs.

4. Effective collaboration

Enhanced collaboration facilitated by integrated procurement platforms also benefits from the Third Party Risk Assessment (TPRA) analysis. This approach ensures that procurement decisions are well-informed and aligned with broader business objectives. All stakeholders and sales executives are brought together under one roof to facilitate seamless collaboration on vendor security. They share and review essential documents, identify issues, and resolve them more quickly.

For instance, understanding the 'Threat' of not meeting delivery deadlines or the 'Passivity' in response to market changes can prompt quicker, more coordinated actions between departments, reducing inefficiencies and mitigating risks associated with poor communication and delayed responses.

How Spendflo can help streamline approvals, monitor expenses, and eliminate risk to streamline your procurements

One of the most common barriers to procurement process improvement is needing access to the right tools. For many teams, procurement optimization requires customizing existing legacy systems, which consumes precious developer resources. 

SaaS purchases are always challenging, but with SaaS management platforms like Spendflo, you can transform your SaaS procurement process. SaaS procurement workflows streamline your procurement by eliminating bottlenecks, centralizing the process, and enhancing transparency in SaaS purchases. This prevents unauthorized IT practices and the accumulation of duplicate applications in your system. Reducing SaaS costs begins with optimizing your procurement procedures. 

Book your free demo with our experts today to learn how SaaS buying workflows can increase your revenue.