Managing the company’s procurement activities manually is not a good idea. Not only does it engage you in cumbersome and paper-based activities, but it will also result in missing paperwork and poor relations with suppliers. Whether you're a fintech company processing countless invoices from various suppliers or an e-commerce business striving to maintain a high inventory, a procurement management system is a necessity for you.
Thanks to the procurement management system, you can take full advantage of document digitization by going paperless. According to recent stats, companies that have implemented this software solution have witnessed an increase in their total spending under the management of procurement solution by 20% but reduced requisition-to-order costs by 58%. Sounds impressive, right? Let’s delve into the details below!
What exactly is a procurement management system?
Initially, a procurement software solution is utilized to simplify and fuel the procurement process in your company. Not only does it allow you to obtain positive results like saved costs and reduced time, but you can also run a strong and smooth supplier network with a simple click. In addition to that, with a robust procurement management solution, you will be sure that the correct quantities of products or items are on the shelves and ready to be sold.
Supply chain and procurement management software solutions: What’s the difference between them?
Only by realizing the difference between supply chain and procurement management software solutions can you better leverage their efficiencies and derive benefits from them. The features of these systems are not fully interchangeable. A supply chain management system has a focus on turning the goods into products and distributing them to customers efficiently, while a procurement one aims at getting the products/items your company lacks.
Why do you need a procurement management solution for your business?
Before you decide whether you need a procurement management system or not, it’s crucial to better understand your business needs. With the help of the procurement software solution, you can keep a close eye on the purchasing process. Moreover, you can prevent information loss and speed up the procurement lifecycle by simplifying the approving/rejecting process in your company. Below is the outline of the reasons it’s essential to have procurement management software:
- to eliminate paper-based work
- to shorten the procurement lifecycle
- to reduce human errors
- to keep the process accurate and consistent
In addition to that, procurement management software will help you improve efficiency, speed and accuracy in your business.
What’s the idea of the project?
DDI Development’s experience shows that we can develop and implement a variety of digital software solutions to meet the business needs of the companies specializing in logistics and booking, e-commerce and e-learning, fintech and recruiting. Recently, we built a procurement management system that helped our client optimize procurement processes and significantly reduced costs. Moreover, the entire procurement process was automated and it ran smoother and faster. In addition to that, the system addresses the following:
- enabling better planning;
- enabling better buying decisions;
- tracking and aggregates spend across the company;
- generating accurate POs;
- analyzing financial reports and suppliers’ details.
Having that in mind, our development team has produced a great concept in developing a procurement management system to meet all the business needs and requirements. Keep on reading to find out more details about it below.
Project structure of the procurement management system
During the course of developing and implementing a procurement management system, we used the following technologies:
The development process of the procurement management system
The development process of the procurement software solution runs from concept to production, as described in the details below.
When developing the procurement management system, we opted for the agile methodology. Not only did it help us better coordinate, but we could also keep the balance even when the workload was extremely heavy. Our team included the following specialists:
- 1 Business analyst (BA)
- 1 Project manager (PM)
- 2 UI/UX designers
- 2 Front-end engineers
- 2 Quality assurance engineers (QA)
- 2 Backend engineers
To create the procurement management system, we chose the agile software development methodology based on the following reasons:
- The team could prioritize the client’s needs over the client’s requirements when planning and allocating activities.
- The team could adapt to any change in the client’s requirements.
- The team implemented a working system that provided value at the end of each sprint.
We needed 24 sprints to demonstrate the work done and completed the project successfully.
During the Product Discovery phase, our Business Analyst gathered requirements and prepared documentation - the functional specifications. In addition to that, the BA analyzed the requirements to make sure that the future procurement system would work as the client wanted. Once all the requirements were identified, our team was able to define the users’ roles. The system included a procurement manager, financial director, and administrator. Also, it included the following features and functionalities:
- Budget and invoice management
- Contract and supplier management
- Request and approval process workflows
- Integration with budgeting and payment mechanisms
According to the documentation, the Project Manager provided the client with a preliminary estimate and suggested the roadmap for the development process of the procurement management system. Once it was approved, we broke down the planned scope of work (so-called Backlog) into smaller chunks named 2-week sprints. In addition to that, the Project Manager had the overall responsibility for task management, risk mitigation, and reporting to the client and stakeholders. Only after receiving which features from the backlog would be developed by this sprint could the team start the design, development and testing process. Generally, QA engineers worked together with software developers in a spirit of collaboration to detect any potential issues. Once all the bugs were fixed, we launched the procurement management system and made improvements based on the client’s requirements.
Below we have provided some information about the user roles within the procurement management system. Not only does it help you get a better understanding of the users’ roles, but you can also define their responsibilities. These are the following types of users within the procurement management system:
- Procurement Manager is a user who can register on the platform, monitor inventory levels, find new suppliers, acquire goods and services, etc.
- Financial Director is a user who is responsible for directing financial planning and strategy, analyzing and reporting on financial performance, reviewing and approving budgets.
- The Administrator has the highest administrative responsibility level within the task management system and can customize that access for users.
Procurement Manager Dashboard
Once you have signed in to the procurement system, you will land on your home page. It consists of the following options - Dashboard, Items, Purchase Orders, PO Receipts and Suppliers. Action icons such as notifications and settings allow you to check different items in the procurement management system in one click.
On the Dashboard page, you can see general information on what is going on within the procurement management system. Not only can you see how many purchase orders are open, pending, not sent, and performing, but you can also view a table that includes the following columns:
- Sending Status
- Due Date
In addition to that, you can create a purchase by clicking (+) Create a Purchase button and fill in all the required fields.
With the Items feature, you can discover all the available items in the company. Also, you can use a search bar if you need to search or apply filters such as filter all company’s items, filter items categories, and filter all suppliers. In addition to that, you can discover what items have been previously purchased and reorder them.
With this feature, you can see all the purchase orders within the company. All the information about the orders is presented in the table with the following columns: ID#, Status, Sending Status, Receiving/Payment, Purchaser, Department, Supplier, Total, Date, Due Date and Actions. Not only does the table allow you to identify the type and quantity of items being requested, but you can also ensure a smooth transaction between the purchaser and the seller.
Only by clicking on ‘PO Receipts’ can you be redirected to this page. This feature is used to create a record of the items on the purchase orders. All the information is presented in a well-structured table that consists of the following columns: #, Purchase Order, Item name, Status, Location, Supplier, Due Date. In addition to that, you can create a receipt with the ‘Create a Receipt’ button.
From the corresponding option in your main menu, you can land on the Suppliers page. With this feature, you can see a list of suppliers you order products and items for your company. Not only does it help you find out the exact one through the search bar, but you can also get rid of troublesome ones. In addition to that, you can increase the efficiency of your purchasing and administrative processes.
With the Notifications feature, you will be notified about all the events within the procurement management system. Moreover, you will be informed about important updates that require your actions. For example, you will be notified once the financial director has approved the budget for purchasing.
Financial Director Dashboard
You can sign in to the procurement management system and obtain the role of a Financial Director. Once you log in as a Financial Director, you will see the following hub of navigation on your Dashboard:
- Purchase Orders
In the header of your homepage, you will find out the action icons that enable you to quickly check different items in the procurement management system. They are always present in every area of the system, not just the homepage. Let’s take a closer look at them below! On the Dashboard, you can see the areas such as:
- Current working capital that includes current liabilities and current assets
- Actions required
- Recent Orders
With the Purchase Orders, you can make smart financial decisions before purchasing. Not only can you see the items or services your company requires, but you can also define the quantity, delivery timeframe, and payment terms. In addition to that, you can approve or reject any purchase order.
With the Invoices feature, you can maintain a healthy cash flow in your company. Not only can you speed up the billing process, but you can also eliminate manual entering of information in each invoice. In addition to that, you can increase efficiency and close the gap between purchase orders and actually getting paid.
This feature lets you know how much your company has spent on purchases and can track it with a simple click. All the information is presented in a well-structured table that includes the following columns: ID#, locations, budget holder, start date, due date, total, available, percentage bar, actions. The percentage bar provides a visual overview and indicates how close you are to meeting or exceeding your budget.
With the Suppliers feature, you are aware of all the suppliers you deal with. Not only can you see detailed information about each supplier, but you can also see rating breakdown and their key performance indicators. Moreover, you can add some additional documents if there is a necessity.
Reports feature lets you see important financial information that helps you evaluate the financial performance of your company. Not only does it help you communicate the past successes, but you can also talk about future expectations of the business. All the information is divided into the following tabs - Revenues, Expenses, Profits, Capital, and Cashflow.
Only after logging in to the procurement management system as an Administrator, you can see the list of navigations. As an Administrator, you are responsible for the following options presented in the main menu:
- System Settings
You can reach the Users page from the corresponding option in your main menu. Here you can find two tabs - Employees and Suppliers. This gives you the privilege to manage them and you can also add, edit or remove information about them. On the Employees page, you can see the table that includes the following columns:
- Full name
- Role (Procurement Manager/Financial Director/Administrator)
With the Finance feature, you can comprehensively and systematically view the most important financial areas of your business - Budgets, Invoices, Expenses, Account payable - to make wise decisions that result in great business performance. Moreover, you can discover the problems timely, adjust the operation direction and provide the basis for better forecasting and decision-making.
This particular feature is used to make all the essential changes within the procurement management system. From changing information about your company and adding/deleting users to configuring purchasing statuses. Moreover, you can integrate third-party solutions and protect some sensitive information from leakage.
Key features of the procurement management system
Below you can discover the key features of the procurement system you can take into account when looking for it:
- Invoicing automation: thanks to a centralized database for all your invoices, you have real-time access to the status of all your invoices and get a clear picture of your company’s invoice spent.
- Documentation support: with this feature, your employees and finance teams can keep the documentation (purchase orders) on track and make purchases wisely.
- Contract and supplier management: with this feature, you can better manage suppliers’ contracts and monitor their compliance.
- Request and approval process workflows: with this feature, you can replace the paper-based approval process and automate it.
- Integrations: with this feature, you can integrate a great number of third-party solutions such as payment gateways, budgeting mechanisms, supply chains, etc.
- Budget management: with this feature, you can better manage your money and get more control over it.
Benefits of the procurement management system
Here you can find out some benefits that come with incorporating a procurement management system into your business:
- Better budgeting: not only can you generate accurate purchase orders, but you can also calculate order quantities and get a better idea of how much to budget for purchases.
- Make more conscious decisions: Using this system, you will be able to make better buying decisions when purchasing the right products at the right time.
- Optimize the purchasing process: thanks to this system, you can simplify the purchasing process and save time. Moreover, you can better control and reduce overspending. It also allows you to work on more strategic and important business processes.
- Measure purchasing performance: not only can you analyze financial data based on performance objectives, but you can also set actionable goals to keep costs low and make sure the items purchased are on-time.
- Deal with unexpected expenses: thanks to this system, you can better assist with budgeting and planning. Moreover, utilizing purchase orders allows you to avoid unexpected expenses.
Bottom line: Want to build a procurement management system with a reliable team?
Only by having a procurement management system in place can you open up ample opportunities for improving the procurement process performance and automating it. Moreover, you can also eliminate paper-based workloads and improve the productivity of your entire business. In addition to that, you can save time and resources and focus on more strategic business processes in your business. As you can see, a procurement management system is a great option that will definitely add value to your business. Thinking about building a procurement management system? We, at DDI Development, can help you figure out what features and functionalities you need to conquer the market. Just drop us a line!