12. Procure-to-Pay Systems

Procure-to-pay systems. In the quest of gaining additional efficiency in the procurement department, a lot of companies have looked at IT solution to improve their efficiency. So called procure-to-pay systems have made the job of a buyer a lot easier. And they do it by automating certain steps that previously had been done by hand. The way procured-to-pay systems work is that they provide the backbone of the whole purchasing process. From finding a supplier and finding the right item, by providing a catalog, to sending out a purchase order, to confirming the receipt of the goods, to paying an invoice. All of these steps are done electronically, they’re done seamlessly, and they integrate with a systems of theses suppliers, and sometimes even with customers. So we are using our customers procure-to-pay system and they are gaining efficiencies by working with us as well. There are certain benefits to using procure-to-pay system. By automating certain parts of the purchasing process, we’re able to get efficiency without human intervention. And they’re also very transparent because all of the information is in one system.
In addition, we can integrate into our inventory management system, our warehousing system, and even trigger orders automatically and have our suppliers fulfill them seamlessly. So we don’t need to think when we need to buy additional wood for our pizza oven. Our pizza oven will always have wood because as soon as we’re running low, we are sending for additional wood. A special feature that is built into some of these procure-to-pay systems is called reverse auctions. The way a reverse auction works is we have a specific item that we’re looking for. And we have put forward the exact specifications, quality level, everything that a supplier would need to know about the item we’re looking to purchase. And we’re sending that information to all our suppliers that could possibly be interested in supplying us with the item. Now, what they do on their end is they log onto the system at a specific time, and they’re putting in the price that they’re able to charge for supplying us with that item. And we see all of the different prices that suppliers offer and sometimes we could even let them played out through multiple rounds where they can bid against each other. Unlike a traditional auction where the price goes up, in a reverse auction the price keeps going down and down, which is better for us, the buyer. Now you can only used reverse auctions well in specific situations when the product is very precisely defined. If it’s vague or if they’re multiple ways of achieving the outcome that we desire, I don’t think it’s a good idea to use reverse auctions. It’s a great tool to quickly get to the best price for a very well defined item.

Jim Rohn Sứ mệnh khởi nghiệp