09 Dec Procurement Automation in Non-profit Organizations
Procurement is one of the key activities in non-profit organizations. To enable people from marginalized communities’ transition to a better quality of life, faster delivery of services is essential. Procurement departments in non-profit organizations support the service delivery by ensuring the supply of a variety of materials for respective programs. Swift and hassle-free procurement process is therefore necessary to achieve faster service delivery. However, even today, in many organizations, procurement departments haven’t evolved to take the advantage automation gives in terms of efficiencies.
Procurement personnel in many non-profits still use excel sheets and e-mails to run the process. Despite availability of many procurement automation solutions that can be tailored based on needs of the organization, not utilizing them could mean:
Underutilization of human resources: Employees spend a lot of time on paper work, which means the time available for most important aspects like ensuring smooth and timely supply of materials, and sourcing better vendors who can provide better cost, quality and delivery is less. Especially in non-profit organizations where optimal utilization of every rupee is a top priority, more efforts are required on sourcing and negotiating with a lot of vendors rather than on paper work.
Slow processes: Approval of a single purchase request could take few days, if carried out manually at every level of hierarchy. In our organization it used to take about 1-3 days for a request to be approved at all levels, before automating this process. Today, it only takes 3 hours on an average for this entire process and also the follow-ups per request are almost zero.
Poor decision making: There are several challenges with analysing data manually, including authenticity, accuracy, depth and time. Lack of quality data on crucial parameters like spending patterns, vendor pricing comparison, etc. will result in poor decision making.
Errors in contract management: Many organizations work with a variety of material suppliers and service providers. Whenever a new purchase is being made, making changes to contract agreement templates by typing all the relevant details often results in errors.
These barriers in a non-automated process will delay the delivery of services and slow-down the progress of communities towards a better tomorrow. Procurement automation in processes like purchase requisition, vendor management, etc. will not only speed up the delivery of services but will also enable in making decisions that reduce costs and improve quality. The following are some advantages of procurement automation:
Improved vendor management: Automated process will reduce paper work and make more time for procurement personnel to source and negotiate with vendors, thereby increasing the chances of getting better products for cheaper rates. It will also help with comparative statements on different vendors in terms of prices, discounts, quality, service, etc. in minutes, thus enabling quicker and better decision making.
Faster procure-to-pay cycle: We were able to successfully bring down the purchase request approval time from 3 days to 3 hours by automating just the indent process. Complete automation will result in seamless integration of all the steps in a procure-to-pay cycle from identifying needs till making the payment, therefore auto-routing the actions to be performed by the concerned person/department without any need for paper work or mailing.
Improved accuracy: It will lead to accurate data insights and error free contract management by reducing the manual intervention.
Overall, the often overlooked procurement process automation is highly relevant to non-profits in furthering their mission while incurring minimal expenditure. Identifying the right technology solution and customizing it based on needs of the organization is the key.
Head – Admin and P&SS
Disclaimer: The views published in this blog are that of the author and do not reflect those of Dr.Reddy’s Foundation.