Procurement process

digitise and automate

Despite numerous technological possibilities, the procurement process in many companies is still characterised by manual interventions. This results in an enormous effort, which is often not in relation to the actual order value. The goal must therefore be to optimise and automate all steps of the ordering process – both internally and in communication with suppliers. Here you can find out what challenges are associated with this and what added value an electronic procurement process offers in detail.

Purchase-to-Pay – from procurement to payment

Every day, companies go through the so-called purchase-to-pay process – sometimes also called procurement-to-pay or P2P for short. This process begins with the demand notification, extends over the order, order confirmation and delivery and finally ends when the supplier invoice is cleared. We want to focus on the first half of Purchase2Pay: the procurement process.

1. Demand notification or purchase requisition
2. Examination and approval of the request
3. Supplier selection and triggering of the purchase order
4. Received order confirmation from the supplier
5. Receive goods and post goods receipt on the basis of the delivery note

6. Invoice receipt (usually paper, e-mail or data format)
7. Invoice check, assignment of invoice to purchase order
8. Approval of the invoice
9. Booking and payment of the invoice
10. Archiving of the invoice in accordance with legal requirements

Steps 1-5 represent the most important parts of the ordering process. The multitude of individual operations that take place in different departments of the company and involve numerous employees makes the procurement process extremely complex. To make matters worse, the prescribed procedure often must be adhered to even if the items have extremely low value. This includes indirect demand (e.g. office supplies, excipients).

When you use an SAP system, you know that only parts of the sketched workflow can be shown in the ERP software: the purchase requisition, the purchase order and, if applicable, the order transfer. All other process steps are either paper-based or via third-party systems. Manual interventions and a low degree of automation are the rule rather than the exception.

Enormous potential through digitalisation and automation

Numerous studies exist on the cost of the purchase-to-pay process. For example, a study by the Leipzig University of Technology, Economics and Culture (Source) assumes that the process outlined above, including incoming invoice processing, costs about 115 euros if it is passed through manually. Full digitisation would nearly halve the costs, according to the study. Depending on the number of orders, this results in savings possibilities, which can quickly amount to tens of thousands or even several hundred thousand euros. This enormous financial potential is reason enough to take a closer look at the digitalisation of the procurement process. However, there are other benefits when forms, emails, and manual system input are replaced with digital solutions.

Minimizing sources of error
Increased transparency in procurement
Targeted management of procurement activities (no so-called Maverick Buying)
Ensuring delivery dates, no threat to subsequent processes (e.g. production)
Adherence to compliance regulations
Accelerated releases

The way to the digital ordering process

Most companies today use ERP systems like SAP to map their ordering process. Two important elements have already been digitised in this case: the purchase requisition and the purchase order. Between and after these steps, however, there are many manual, sometimes even paper-bound process steps. This includes checking and releasing the demand notification, selecting suppliers, creating and transmitting the purchase order, processing the vendor order confirmations, and assigning goods receipts to purchase orders. With modern tools, all these steps can not only be mapped in the system but also automated in large parts.

Our solutions for your purchase-to-pay process

Purchase-to-pay or procurement-to-pay (P2P) is a central process in any company. From procurement to processing order confirmations to payment of incoming invoices.

The xSuite covers all parts of the procurement-to-pay process. From procurement to the handling of order confirmations to the processing and payment of incoming invoices.

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Procurement process

Purchase-to-Pay – from procurement to payment

1. Demand notification or purchase requisition

2. Examination and approval of the request

3. Supplier selection and triggering of the purchase order

4. Received order confirmation from the supplier

5. Receive goods and post goods receipt on the basis of the delivery note

6. Invoice receipt (usually paper, e-mail or data format)

7. Invoice check, assignment of invoice to purchase order

8. Approval of the invoice

9. Booking and payment of the invoice

10. Archiving of the invoice in accordance with legal requirements

Enormous potential through digitalisation and automation

Minimizing sources of error

Increased transparency in procurement

Targeted management of procurement activities (no so-called Maverick Buying)

Ensuring delivery dates, no threat to subsequent processes (e.g. production)

Adherence to compliance regulations

Accelerated releases

The way to the digital ordering process

Our solutions for your purchase-to-pay process

Procurement

Order confirmations

Incoming invoices

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ZELMION GmbH