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Procurement software is business software that helps to automate the purchasing function of organizations. Activities including raising and approving purchase orders, selecting and ordering the product or service, receiving and matching the invoice and order, and paying the bill is handled electronically, enabling the procurement department to see everything that is ordered, ensure that nothing can be ordered without correct approvals, and lets them get the best value by combining several orders for the same type of good or even getting suppliers to bid for the business.
Raising and approving purchase orders
Raising Purchase Orders
- The vendor you will buy from
- The part(s) you wish to buy
- The price(s) you wish to pay
- The date the parts are required
- The quantity needed.
Approving Purchase Orders
- Sole Source Sole source for this equipment, supplies or services.
- Compatibility: Only item that is compatible with existing items.
- Specifications: Only source that can meet unique specifications.
- Acceptability: Only source acceptable to the ordering department. All other sources considered inferior.
- Contract: Purchased from a preferred contract and/or participating supplier.
- Delivery: Only source that can meet the delivery requirements.
- Limited Resources: Only known source that can be found for this particular item.
- Previously Bid: Formal bidding was completed for this requirement within the past 12 months. Supplier selected was identified as the low bidder in this process.
- Quality: Ordering department has determined that this supplier can provide highest quality service based on specific business requirements.
- Fair Trade: Prices for the item(s) will be the same from all sources. Bidding would be inconsequential.
- Limited Availability: Bid(s) attached are the only quotes available, other potential sources declined to bid.
- Pre-Commitment: Selection of and commitment to the supplier was made by the ordering department prior to Purchasing Services involvement.
- Architectural & Engineering Services: Office of Facilities Services is responsible for all A & E service requirements. Bids are not required.
- Subcontract: Office of Research Services is responsible for subcontracts. Bids are not required.
- Bid Waiver: The ordering department has submitted an acceptable request to waive the competitive bidding process based on specific business requirements.
- Construction Management: A Construction Management contract is in place with the contractor.
- Low Bidder: The low bid supplier has been accepted and documentation is on file.
- Change Order: A request to change or modify an existing purchase order based on specific business requirements.
- Professional Services: The ordering department has provided an acceptable business justification based on specific business requirements for this supplier of professional services.
Selecting and ordering the product or service
Selecting the product or service
- Product or service improvement suggestion. Information sources include:
Stakeholders. One of the major benefits of inclusive stakeholder engagement is idea generation, authentic information for product or service improvement flow regularly into the company from the stakeholder engagement process. This is for companies that have stakeholder engagement strategy that accept stakeholders as partners and include all categories of stakeholders not just those in the supplier-customer chain in their planning and execution of projects and programmes.
Feedback from the field through sales reps
Suggestion boxes
Websites FAQs and company blogs
Social media
Customers relations fora
The introduction of a new machine or process
Sheer interest to try something new
Internal research efforts.
Competition
Suppliers and other members of the supplier-customer chain etc.
- Data Collection. When a product or service is so identified, more data will then be collected to verify and understand the situation more closely and ascertain the extent of deviation from desired standard. There are many data collection methods available for this purpose some of which are
Surveys
Questionnaire
Check sheets
Interviewing etc.
- The cause of the problem should then be established using methods such as cause and effect analysis.
- Collected data will have to be analyzed and displayed appropriately to produce meaningful information for easy understanding. There are many data analysis and presentation techniques that can be used such as
Pareto analysis
Histogram
Control charts
Scatter diagrams
Force field analysis etc.
Ordering the product or service
- Purchase Order Processing. Typically the operator retrieves the purchase order and displays it on the matching screen by entering the purchase order number. This causes the purchase order line items to appear on the matching screen as shown at the bottom of If the vendor has not indicated the purchase order number on the invoice, the system should allow all purchase orders for that vendor to be searched and displayed
Once the purchase order has been found, similar features are available for searching and selecting individual line items to match the invoice line item being processed.
Receiving and matching the invoice and order
- A well-run environment uses an automated matching process to match invoices to purchase orders and receiving information. This makes sense as all of the required purchasing and receiving information is already electronically stored by the purchasing system. The matching procedure helps ensure that the invoice is for goods or services that have been received and that the amount invoiced was previously authorized via purchase order. Many organizations use this as a strict control procedure to ensure that the goods being paid for have been previously authorized.
- Automated Matching. With the complete automation of this process, there is no longer a need for a paper voucher form and a packet of matched documents. In this environment the voucher is an automated record in a computer file that was built from vendor invoices and matched against purchasing information. From an accounting standpoint this automated voucher is still the unit record of liability and, therefore, just as important as any paper voucher document.
In a controlled environment the purchase order will precede the arrival of the vendor’s invoice. With luck, the goods will too and the accounts payable department will have both receiving information and purchasing information available by the time the vendor invoice arrives. - There are several advantages to using an automated system to match invoices and purchase orders:
Paperwork is reduced.
Automated files do not get lost as easily as paper files.
The searching, sorting, and routing capabilities of an automated system expedite the matching process, replacing the paper handling, filing, and routing that are otherwise necessary in a paperbound system.
The ability to remotely access a central file facilitates information sharing between distant locations, such as purchasing and receiving.
The need for the accounts payable department to rematch and review documents already matched in purchasing or receiving disappears.
Company-level policy and options can be set up to control how, or under what circumstances, matching and exceptions should occur.
System features allow management and the purchasing department personnel to easily authorize freight and tax charges on an invoice.