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Blog March 03, 2016

Digitalk: Get your procurement process in order now!

Checking incoming invoices is the most common procurement control procedure in businesses. Unfortunately, it does not always work very efficiently. This is probably also the case in your organization. Digitalization and more efficient financial processes allow businesses to free their financial administration resources for more meaningful tasks.

Purchasing goods and services may sound like a menial task, and for most organizations it is part of their daily routine. Few consider it their core business.

However, procurement is an area where many businesses have considerable, albeit often overlooked, development potential. Do you know whether your organization is ordering goods and services at the right prices, in the right quantities, and at the right time? Are you even using the right suppliers? And above all, are you ordering goods and services that you actually need?

For many businesses, the problem is that information about centralized procurement and contract negotiations with suppliers is not disseminated transparently across the organization, and the potential of centralized procurement is not maximized and the process not properly overseen. This soon leads to confusion and haphazard purchasing.

The IT procurement process is a typical example: Many organizations have contracts with telecoms operators and suppliers that are either out of date or include terms that have changed since the contract was signed, or that are no longer observed at all. It is vital for businesses to review their contracts at regular intervals to establish which ones are still in force and on what terms, and which ones no longer serve the organization’s interests. Better management of IT contracts alone can help save businesses considerable amounts of money every year.

Fixing the order management process increases the efficiency of procurement and improves profitability through savings. It also enables the adoption of more efficient business processes across the entire organization.

Digitalization allows tasks that were previously performed manually at high cost to be performed electronically. The digitalization of procurement processes eliminates mistakes, when orders are placed on the right terms and according to commonly agreed rules from the beginning.

When contractual terms agreed with suppliers and organizations’ own purchasing practices are in electronic format, the validity of contractual terms and the contents of orders can be verified automatically at the time of placing orders, thereby preventing incorrect invoices and orders that differ from what has been agreed.

This also frees organizations’ financial administration and procurement resources for tasks that genuinely support their core business instead of wasting time on unnecessary routines, such as manually processing suppliers’ invoices after an order has already been placed and goods received on incorrect terms.

The author, Senior Consultant Roope Rauhalinna, helps Enfo’s customers maximize the efficiency of their financial processes and free their human resources for tasks that genuinely support their business.

Enfo is an expert in electronic financial administration that helps its customers identify what in their financial administration processes eats up the most resources or leads to haphazard purchasing. Enfo identifies problems and bottlenecks in procurement processes and draws up clear development proposals for customers to maximize their procurement efficiency and ensure that the right goods and services are purchased at the right prices and at the right time.

The author, Senior Consultant Roope Rauhalinna, works as a consultant in Enfo’s Financial Process Service competence area.