You’re in a procurement-heavy business that relies on a steady, efficient supply chain. Your procurement team is always filling out purchase orders, almost daily now, because your production lines are busy on all three shifts.
Your Excel spreadsheet is bursting at the seams, and the color-coding you created a year ago is now more confusing because every sheet looks like a Christmas tree. Your procurement process could use a little less excitement when your engineer comes up to your office in the middle of a shift and wonders what happened to the purchase order request he made three weeks ago for supplies that should have already arrived.
Maybe it’s time to invest in some procurement software.
Let’s take a look at the different types of small business procurement software on the market today to help you determine which one best fits your needs.
Why Does My Company Need Procurement Software?
You have many reasons why you need this type of platform.
- Reduces costly mistakes made during the procurement process.
- Makes your procurement team more efficient by reducing labor costs associated with purchasing.
- Automates mundane, time-wasting tasks.
- Allows staff to focus on other important tasks.
- Provides spend analytics so you can make decisions about suppliers, prices, and production.
What Are the Different Types of Procurement Software?
You have easily 10 different choices when it comes to the types of small business procurement software.
Why so many options?
Software companies diversify their offerings to try to capture more of their target markets. For example, a procurement software company may specialize in five different varieties of this platform, but each one has different levels of service that cater to varying degrees of requirements for procurement teams. One team may just need automatic invoicing or purchase order generation, while another needs the purchasing process automated from end to end.
As such, not all procurement software offers the same features. Some programs have one focus, like purchase order automation or supplier management. More robust eProcurement software handles everything and even integrates into accounting and planning programs so companies can plan for growth in the future.
Another reason why there are so many types is because of this industry. Leading industry publication Supply Chain Digital reported in 2019 that the procurement software market is due to grow to $9.96 billion by 2023, doubling its market value from numbers in 2017.
Reasons for the growth came from improvements on the analytics side due to machine learning, AI, and algorithms that help with process and data management optimization. These advanced features provide a strong push for procurement teams to invest in procurement platforms to see a return on investment from their procurement software.
The rise of cloud-based options has also led to the boom in procurement software for small businesses. You don’t have to store documents in paper files (that is so ‘90s) nor on the hard drives of your computers. Your chosen platform likely stores and maintains your database of information on a remote server through cloud-based applications.
Here are the kinds of procurement software available today.
Purchase Order Software
Purchase order software manages one specific aspect of your procurement process.
This type of procurement software automates the generation of purchase orders to make it easier to manage the approval workflow, spending, supply chain logistics, supplier management, and budgeting.
Authorized users can automatically create digital purchase orders with vital information already filled in various fields. Then it automatically goes to someone higher up the approval workflow chain before it gets sent to a supplier, all electronically. The supplier then replies in kind, letting you know when to expect order fulfillment while sending you an electronic invoice once you receive the goods you ordered.
Supplier Relationship Management Software
Not all suppliers are created equal. Even though you have your favorites, over time some suppliers may not be the best fit for you. Supplier relationship management software specializes in identifying vendors that can diversify your supply chain when (not if, when) you run into issues at some point in the future. Not only can this type of procurement software compare suppliers and their overall costs, but it can give you tips on strategic sourcing by finding vendors based on specific criteria, such as capacity, location, and logistics.
Spend Analytics Software
Every part of your business operations, from your procurement process to sales, generates data. Spend analysis using this type of program highlights patterns in your purchasing process that give you insights to streamline processes, save money, find better suppliers, and improve your production lines. You can create reports on almost any type of financial data you have on spending with this procurement software.
Contract Management Software
Before you have purchase orders, you have to have contracts with suppliers and vendors. Contract management software allows your teams to create contracts quickly by inputting custom information based on your standards. Auto-fill items from quotes to populate contracts, then alert your procurement team that there is another supplier your company can use. Once your staff fills out a new contract, it can go to a manager or supervisor for approval.
Electronic Sourcing Software
Also called eSourcing software, this kind of procurement software for small businesses enhances your purchasing process by letting you send requests for proposals, quotes, and information to suppliers, and they respond in kind (all digitally). This platform lets you assess the best suppliers based on the bids they have returned to you. Over the years, you can see how each of them stacked up as you selected ones that were right for you.
This kind of procurement management software lets you choose from a pre-approved and customized catalog of products for sale from suppliers. You get to see exactly how much you’ll spend, what inventory the suppliers have on hand, and whether they will fit your needs. You can even take advantage of vendor discounts and promotions, especially when buying in bulk.
Upon selecting everything, the system auto-generates a purchase order that goes to someone higher up the chain for approval.
This variety of procurement software for small businesses also allows you to perform strategic sourcing as you seek out the best possible supplier for your goods.
Electronic Invoicing Software
Otherwise called eInvoicing or ePayment software, this procurement process software gets rid of some extra steps for your purchasing. Rather than sending you an invoice by email, you can connect approved suppliers to your procurement and accounting system to allow vendors to receive payments for goods delivered.
Think of this software as procurement and accounting rolled into one. The key is to make sure every purchase order is approved before sending it. Invoices are also automatically matched to the purchase order and accounts receivable system to make sure everything is accurate. Whenever a computer program reduces a manual step in your procurement process, it reduces errors and increases accuracy.
All-in-One Procurement Platforms
An all-encompassing procurement solution comes from comprehensive procurement suites that handle everything in your purchasing process from start to finish. These software suites combine many types of procurement software into one. The most robust procurement platforms handle everything we’ve mentioned in this guide and then some.
Other features of top-level procurement software include integrations for:
- Inventory management based on purchases and your procurement process.
- Asset management that tracks your hardware and equipment.
- Project management that keeps timelines moving forward.
Custom procurement software suites provide complete functionality as soon as you integrate them into your existing system.
Find the Right Small Business Procurement Software for You
Investing in a procurement platform can save on labor costs while making your purchasing more efficient.
ControlHub provides a robust procurement software suite that gives you the insights you need to make data-driven decisions about purchasing, spend analysis, strategic sourcing, and more.
Our procurement management software comes with:
- Automated purchase order generation
- Approval flows to make sure purchase order requests go to the right staff
- Budget tracking
- Spend analytics
- Automatic match and pay processing when you receive an invoice
- Integrations with accounting software
Our procurement solution saves you time, money, headaches, and errors in your procurement process, so you and your engineers can focus on your core business model.
We’ll help your business grow through spend analytics that let you see your company’s purchasing habits while allowing you to pick the best suppliers for your raw materials based on their best fit for you.
We look forward to hearing from you!