Anand Pawar
April 26, 2022
Importance of Automated RFQs
No doubt that RFQ processing is the first and the most important step for any procurement department, irrespective of the industry vertical. If not done properly, the procurement manager is likely to undo many changes in the future and in most times lead to complete cancellation of the present RFQ and creation of a new one. While a basic RFQ management software, can take care of many such needs, main challenges that every procurement manager face is handling the volume of enquiries that need to be sent, collection of quotations from vendors and evaluated regularly meeting the timelines and deadlines of the project at hand.
With the best eProcurement software in place, Chief Procurement Officers of top organizations throughout the world can boast to operate high volumes with smaller teams and thus significantly lower labor costs. It is imperative that the following basic features should be present in the RFQ management module or the Online eTendering of the Source to Pay software.
- Ability of create SMART Template
Our recent survey among many procurement executives showcase that the following are the common thoughts that crop up after sending an enquiry/RFQ:
- Did I mention all the required Technical details?
- Did I mention all the Terms & Conditions?
- How do I collect the quality score from the vendor?
- How do I collect the price breakup of all the items?
Humans are prone to errors. It is almost impossible to be precise, accurate and fast at the same time. This is where digitization in procurement comes to help. It helps in keeping the work organized, neat and makes the work quick, efficient and hassle free.
The entire procurement department can be segregated into 5-7 major divisions, basis the item category they deal with. It is imperative that all these divisions have a single common format to send out enquiries / RFQs to suppliers, a common format to receive clarifications from suppliers and respond back, a common format to receive quotations from suppliers and most importantly a common format to evaluate the submitted offers.
SMART templates is a unique feature of mjPRO, a Cloud based procurement software used as a Sourcing Solutions For Large Corporates. It helps procurement managers to categorize the type of buy, have multiple pre-defined and interactive templates, shows dynamic breakdown of all price elements and most importantly one standard Comparative Statement per procurement category. This gives the flexibility of having multiple Comparative Statements for the different procurement categories present in any procurement organization, but also the commonality across the same purchase category.
- Integration with PR / Indent Modules of existing ERP
Now a days almost all large corporates have shifted their record keeping and data repository into an ERP, which beautifully connects the internal landscape – Procurement, Finance, Accounts, User department, Admin, Senior Management etc. But what an ERP lacks is the connection that is needed with the external stakeholders i.e. vendors.
While an e-Procurement software can provide that, it would be extremely tiresome if the ERP and the e-Procurement software do not exchange data between themselves. The procurement manager would then have to toggle and toil between the 2 systems, downloading all the data that is available in ERP & upload into Vendor Connect Portal / eProcurement Portal, so as to establish the connection with the outside world. And do the same again when the vendor quotations are received.
This is redundant and should be avoided. mjPRO, an in-house Sourcing platforms in India, has the ability to integrate both on real time (API mode) as well as scheduler basis (batch mode) with all the major ERPs. While the API based integration exchanges data instantaneously, scheduler based integration can be brought down to as low as a 15 minute interval i.e. 96 scheduler runs per day
Some materials are always bought very frequently, mainly because of their nature of the product or the nature of their demand or the extreme volatility in prices which makes setting up Rate Contract awfully difficult. For such materials, constantly purchasers need to be present in the procurement cycle. While one cannot eradicate the occurrence of the buy, there is always an option to automate the procurement process, so as to get relieved from the mundane regular activity. This frees up the bandwidth of the procurement manager which leaves him time for other value added jobs. This is achieved by the power of digital procurement through an eProcurement software.
Machine Learning (ML) has come a long way since its inception. ML concepts can be used to solve this as well. mjPRO has incorporated ML based features which allows all materials procured within a finite period of time, get converted into automatic RFQs with the same set of vendors and Terms & conditions of the last instance and publish itself to the vendors with absolute no human involvement as well. This has helped clients using mjPRO to reduce their RFQ making time from a few hours to as low as 15 minutes from the time of raising of material requisition in the ERP.
This feature of the product makes it extremely dynamic in nature. The product thus has the ability to learn after every procurement cycle & then check the presence of any previously procured item (at an item code level) within an incoming PR. This is a unique feature of mjPRO which has extremely benefitted large corporations who had always wished to increase their productivity and operate the procurement with smaller teams.
Purchase Managers, especially dealing with frequently bought items like MRO, AP items etc strive to bring about standardization in their daily work. A primary need for them, which not only allows them to work fast, but also increases their productivity and accuracy at work. One such feature high in demand among many procurement professionals is the system ability to clone any previous tender with all previously used vendor base, Terms & Conditions, quotation submission duration etc.
The tender cloning feature is a manually triggered feature of the mjPRO product, which allows a purchaser to clone any previously created RFQ into the current selection of items, enabling not only the time taken in creating an RFQ, but also negates the possibility of slippages of any vital information.
With automation driving procurement processes and redefining our traditional approach to buy things, AI and ML has definitely made life easier for procurement professionals enabling them time to concentrate on value added jobs in their sphere.
So is your e-procurement software enabled with these automation features and help you reduce your RFQ creation hassles. Let us know.
Simran Alchemist
February 10, 2020
Procurement Platform : Intangible Benefits
In today’s digital world, manual procurement process has evolved and is getting digitized. But the big question is, what is the need for digitizing the platform and what benefits to look for from the platform? There are a lot of benefits in digitizing the procurement process. It delivers incisive analysis and insights to the CPO, gives full control across categories to sourcing professionals, and enables ‘consumerized’ ordering to buyers. The list can go on. Let us discuss about the intangible benefits.
a. Transparency:
Procurement process become more transparent and as the platform is used for keeping the overall data, it helps in eliminating the duplicate orders, accurate inventory, tracking the procurement cycle resulting in complete control of the overall procurement process. More so, the bids are encrypted & secured till the bid is opened and cannot be viewed by buyer
b. Standardization:
Procurement platform helps in standardizing the process and workflows involved in the cycle there by reducing any deviation of the procurement policies and guidelines. Standardization also helps in integrating the processes effectively and keeping the quality of the goods or services procured.
c. Global Reach:
Procurement platform enables the organization to reach the suppliers globally rather than locally only. This will give the organization competitive prices for the goods to be procured and also in increasing the quality of the product.
d. Data Management:
Procurement platform stores all the information of the supplier and goods procured, it gives a better insight to the organization in planning and creating the roadmap for development of the procurement process. It also, gives an insight of the market trends involved and will aware the organization regarding the price trends for each of the
goods procured.
What procurement platform are you working on? What are some benefits that you have experienced? I will be happy if you exchange your views with me.
Until later.. Cheers!
Simran Alchemist
December 27, 2019
In today’s world of economic evolvement, almost every organization is under pressure to cut costs from wherever possible. Procurement has a huge impact on the profitability of the organization, and so, is in prime focus for reducing spends.
Before we actually start reducing the procurement cost, there is need for awareness, analysis, acceptance and acknowledgement for the willingness to change and implement accordingly.
Reducing the procurement cost involves strategic changes, process changes, inventory management and supplier management within the organization. Some of the ways to achieve a sustainable cost reduction in procurement would be:
• Spend Analysis:
One of the effective ways of reducing the cost, is analyzing spends involved in the procurement process. It has been found that organizations having a spend analysis have performed better than those who do not have a spend analysis mechanism. It gives a better insight to organization to perform across cost effectiveness, staff productivity, cycle time and process efficiency.
But it’s easier said than done, as to analyze the spend, you need to collate the data correctly & also all points of data collection should be implemented in a software platform. We have to get rid of input & output of data in an undocumented form & also the data should be collected in soft form which can be read & analyzed by a system.
• Training:
As the saying goes, training is costly but not to train is costlier. Effective training can improve the bottom line of an organization through reducing expenses. Training not only benefits the individual but also increases the organizations productivity and profitability. The important thing is selecting the right training program helping the corresponding organization in taking right decisions. For example, a procurement professional faces significant challenges while negotiating with the supplier and correspondingly keeping the relationship good. So, to sharpen the negotiation skills, simulations and training can be given to the personnel which will help him to apply the knowledge directly in his job. There are a lot of procurement and supply chain management online courses which can help any organization in imparting the correct trainings.
• Demand and Supply Management:
Optimizing the demand of the procurement is the key piece of the puzzle to reduce the cost. This involves, correct quantities of procurement. As, one of the main roles of procurement is to obtain the services and goods for internal needs, the procurement professional should analyze as if the goods or services is really required or not. So, if consumption is reduced, cost reduction will be incurred significantly.
• Supplier Management:
Managing the supplier relationship and management will help the organization to reduce the procurement cost significantly. For example, restructuring the supplier relationship through collaborations or partnerships can add more value to the organization. Also, exploring alternative supplier is a good way to reduce the cost, provided the current supplier is considered “high price” in the industry.
• Automation and Data Management:
An organization having automated processes and data management will help the organization in reduction of cost. A 360 degree view of the supplier will always help in better negotiation and managing the relationship with the supplier. This will be possible if corresponding data is well managed or the supplier. Automation significantly reduces the manual effort involved in the procurement process and thereby engaging the professional in more of strategic works for the organization. Data management will significantly increase the efficiency of the professional involved.
• Strong buyer and weak disjointed sellers:
Reduction of procurement cost is best utilized when we have an economically strong buyer & the good or service they wish to buy is sold or served by multiple sellers who are remain discreet & there is no cartel formation. In such a scenario, if price negotiation is done using online modes like eReverse Auction then highest savings can be achieved.
Simran Alchemist
August 21, 2019
One of the primary focus for all the procurement heads is to save more time in procurement process, which has resulted in digitization of the procurement process.
I ask you, is simply digitizing the procurement process the only solution? I don’t think so. Because even after digitalizing, the procurement heads complain that the team spends more time on the non-strategic activities rather than focusing on more growth enhancement. Imagine, how would your supplier react if he was told that he can quote in the same manner using emails & excel attachment as he did earlier? What if there is no need for supplier go through any training for a new platform? What if he was told that there is no need for him to remember another user id & password to the platform?
Robotic Process Automation (RPA) promises to provide the suitable solution for the non-strategic tasks and help to achieve the growth enhancing activity timelines. For a complex procurement platform, RPA can be integrated in the platform for performing small activities and thereby giving the buyers a way to get familiar with the application in a better way. So, the beauty of RPA is that the changes can be implemented gradually.
Most of the suppliers are comfortable submitting bids in excel format and through email. RPA can be used to retrieve the bids and from the mail along with attachments in a folder and automatically submit the bid in the application and suppliers will get alert for the bid submission. The same process without RPA would take the time of the supplier to submit as well as save time for the buyer to manually download the attachments in a folder and save around 15 mins a day.
RPA can also be used to get the purchase data for current and previous transactions and prepare a demand forecast or supplier performance. The setup may take a few days but once done, it can be implemented for other commodities and services. Also, the data can be used or integrated for the reverse auction.
RPA can be implemented not only for the buyer but also for the supplier. For example, if RPA chat bot is implemented, it will reduce the manual intervention of the help desk support. It will also reduce the time for the supplier to get a reply regarding the processes in a few clicks. RPA chat bot is robotic process where the system is fed with data for answering the queries of the suppliers reducing the call to Helpdesk team or support team.
While we all agree that RPA is really effective, somehow in the procurement world it is still at a very nascent stage and there is a long way to go before the organizations can implement it easily. The benefits of cost reduction, resource utilization, strategy and efficient makes it more beneficial for an organization. Moreover, it also is a first step for the organizations who are reluctant and broadened the vision to implement AI, ML and IoT in their procurement process.
admin4mj
November 13, 2018
The primary focus of a procurement process in the last several years has been to reduce cost through digitising the process, and most organisations have successfully implemented a well-defined procurement process on an electronic platform. In the early days, digital onboarding of each and every person was a challenge. However, thanks to a revolution of mobile technology and access to Internet, even the masses have become familiar with the digital world. This shift has helped in faster adoption of eProcurement platforms by all users so far.
Procurement practices in Indian PSUs have been driven by rules and guidelines laid down by various government agencies. Current procurement processes are complex and time consuming. But a paradigm shift is likely to take place soon with the introduction of government eMarketplaces. As a result, necessity of indent process, tendering for each and every purchase of goods and services may not be required at all. Now buyers can visit the eMarketplaces, choose and buy items very easily and in an efficient manner, which is quite similar to general people purchasing from eCommerce sites.
Changes in policies and processes are likely to take place in order to support this approach. Some of the existing procurement processes may not exist in future at all and GFR 2017 guideline is one such change which has already been modified to support that. The imminent rollout of GST will eliminate taxation complexities. Purchase of MRO items by many government organisations will take place through eMarketplaces eliminating locally controlled purchase processes.
Despite having many benefits, this approach has a drawback too. A centralised eMarketplace reduces the scope of negotiation between buyer and seller. Item specification and price published by seller is fixed. But, buyers often want to customise the specification slightly to suit their needs and also bring down the price based on modified specification, volume of order, etc. If the buyer does not get such flexibilities or benefits in the eMarketplace in terms of offer or product, then it would be difficult for them to participate.
Another challenge would be the supply chain management. For example, larger organisations often buy common items in large quantities and want the seller to supply different quantities to various plants directly. This reduces operational cost of the buyer even after managing purchases centrally. Supporting distributed delivery for single order would be a key success factor for eMarketplace.
There would be various such challenges before eMarketplace is adopted successfully but undoubtedly this is a big trend.
In general, there is no doubt that procurement habits are evolving and evolving very fast in India as well as globally. As success of any procurement activity depends largely on timely execution of purchase decisions, an eProcurement solution cannot limit itself only to a PR to PO process which is human-centric too.
An eProcurement solution is expected to support the full life cycle of procurement, onboarding, execution, monitoring and delivery. Supply chain management, managing inventory, sustainable procurement practice and more importantly cognitive procurement is the future.
