Purchasing Information System: the complete guide to successful purchasing management

Introduction

The global market for purchasing management (also known as "e-procurement") accelerated sharply in the wake of the COVID-19 pandemic. According to a study published by The Insight Partners, during the health crisis, many companies felt the urgent need to streamline their procurement processes, and took steps to set up and deploy Purchasing Information Systems (or PIS). This situation has contributed to the growth of the global market, which is expected to reach a value of $4.74 billion by 2027, with an annual growth rate of 6.4%. 

The pandemic has highlighted the importance of having a resilient, digitalized supply chain. Discover the steps to follow to benefit from all the advantages of deploying a Purchasing IS within your company.

Purchasing and Purchasing Information System management: what objectives, what benefits?

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The objectives of a high-performance Purchasing IS

A purchasing IS is an IT tool that collects, in real time, all purchasing-related data within a company. For example, it processes information on suppliers, order status and amounts, and stock levels. 

This data is analyzed by the software to highlight significant facts and events, enable improvements to be implemented and facilitate decision-making. At a time when digital transformation is establishing itself as a new standard in all sectors, the selection of a Purchasing IS is a key step in this process of rationalization and optimization.

The 5 benefits of purchasing management in the company

The deployment of a Purchasing Information System (PIS) offers numerous advantages at different levels of the company:

1. More efficient organization. Thanks to the Purchasing IS, it is possible to streamline the order processing process, eliminate inefficiencies linked to dispersed procedures, and guarantee consistent, structured management.

2. Improved order tracking. Purchasing managers can monitor the progress of orders, identify any delays and take the necessary action quickly to optimize lead times and boost internal satisfaction.

3. More detailed analysis of expenditure. Thanks to the Purchasing IS, it becomes easier to categorize expenses and generate detailed reports, for example, by supplier or by period, in order to identify opportunities for savings or negotiations.

4. Automated processes. By using advanced features such as automated workflows, electronic approvals and notifications, administrative tasks are reduced and time is freed up for higher value-added activities. 

5. Improved communication and collaboration between the various players, thanks to features such as collaborative workspaces, comments and sharing tools. 

Choosing the right Purchasing IS solution

Assess specific purchasing needs

Before selecting a solution, a number of steps need to be taken, starting with a functional needs analysis. Identify and prioritize the strategic points in your organization: supplier management, contract management, inventory management, order management... To do this, don't hesitate to involve the various stakeholders, from purchasing managers to finance teams and end-users.

To complement and confirm the information gathered, it is advisable to analyze available purchasing data, such as purchasing reports, order histories and spend analyses, in order to identify trends, patterns and recurring problems. 

Analyze existing purchasing processes and identify bottlenecks

It's also important to map out current purchasing processes. Document every step, from the initial request to the receipt of goods or services. 

Evaluate any obstacles and inefficiencies. Take an interest, for example, in delays, the mistakes most frequently made by different teams, the difficulties encountered... Not forgetting the regulatory and CSR constraints or supply tensions specific to your sector.

Finally, don't hesitate to explore the root causes of any identified obstacles, looking for factors such as ill-defined procedures, gaps in communication or inconsistent practices. 

Criteria for selecting a Purchasing IS adapted to your company

Choosing a Purchasing IS solution ultimately means choosing a supplier, and therefore carrying out sourcing. In addition to this, there are a number of other criteria to keep an eye on.

There are many solutions on the market, some more popular than others. However, the one that's right for your business will be the one that meets your specific needs and demonstrates alignment with your strategic objectives. For example, you can opt for : 

• a purchasing management solution that manages automated purchasing processes (e-procurement) and centralizes all data. It generally integrates spend-analysis functionalities for effective decision-making.
  
  
• an e-sourcing solution such as those specialized in Supplier Relationship Management (SRM), which provides a real-time view of exchanges with suppliers, guaranteeing a high level of responsiveness and the identification of important signals such as a deterioration in supply or quality.
  
  
• an e-Procurement solution that streamlines procurement processes and integrates functionalities such as electronic invoicing, supply chain management and performance management.

Make sure you choose a solution that guarantees support and maintenance in line with your business requirements. Evaluate, for example, their availability (evenings, weekends and holidays, if your business requires it) and their response times. Make sure your supplier will be able to support your growth in the months and years to come. For example, if your company plans to expand internationally, or into specific and/or regulated markets. Finally, of course, consider the solution's rates. These are generally based on a fixed-price subscription, with variable costs added on top. Don't forget to include internal resources, such as the provision of one or more members of the technical team for the set-up and deployment period.

How to deploy a Purchasing Information System within your company

Planning and implementation stages: an effective and successful POC

For deployment, we recommend starting with a POC ("Proof of Concept") to test the software in your specific context.

1. Delineate the scope of the POC to enable your purchasing teams to test the software using real but defined data sets. Limit the POC to a "manageable" scope in terms of volume, functionality and participants.

2. Design use cases representative of your purchasing processes. POC requires preparation to develop cases specific to your organization that cannot be replaced by standard cases. 

3. Set up performance indicators ("KPIs") and share them with your Purchasing IS solution provider. They will enable you to be aligned on common, quantifiable objectives.

4. Involve users from different departments in the evaluation phase. Their comments and expectations should be incorporated into the POC to facilitate subsequent adoption of the solution by all users.

User training to maximize the efficiency of the Purchasing IS

Setting up an onboarding program for users is also essential. This program should include targeted training sessions, the preparation of detailed user guides, and the establishment of responsive technical support to resolve any difficulties encountered by users.

In addition to the initial program, ongoing training can be introduced. This can be carried out when new functionalities are introduced. It can also cover the importance of data security and the sharing of best practices in the use of the IS Purchasing solution. 

Optimization, monitoring and best practices in purchasing management with the Purchasing IS

Monitoring performance and adjusting strategy successful purchasing management

Regular monitoring of performance and KPIs defined at the outset of the project will enable you to ensure its successful integration. The selection of these indicators is, of course, specific to each company, but some are essential:

• The Purchasing Performance Index is an indicator that measures the efficiency and overall performance of a company's purchasing processes. It is used to assess the company's ability to achieve savings, meet procurement deadlines, optimize costs and maximize the added value of purchasing. By regularly monitoring the IPA, areas for improvement can be identified and strategies adjusted accordingly.
  

• The churn rate, or supplier attrition rate, is a key indicator for assessing relationship stability and satisfaction. By monitoring this rate, purchasing management experts can identify the causes of supplier disengagement, take corrective action and implement effective retention strategies.
  
  
• Supplier performance monitoring involves evaluating predefined criteria such as product/service quality, compliance with standards, delivery times and internal customer satisfaction. By measuring and comparing data for each supplier, it is possible to identify important partners and resolve problems more quickly when they arise.

Best practices for effective collaboration with suppliers

To establish effective collaboration with suppliers, it's essential to put in place good practices that foster strong, beneficial relationships. Here are some specific tips on how to achieve this:

• Embrace the new digital paradigm. Don't try to reproduce every previous habit and process at all costs. Communicate with your teams and support them in getting to grips with the new tool and its new functions, to ensure that you fully exploit its potential.
  

• Share your performance indicators with your suppliers and use the data as a transparent and rigorous basis for discussion. Don't hesitate to organize regular milestones to discuss any necessary adjustments, share key information and ensure alignment with your objectives. Using a Purchasing IS will enable you to exchange information based on reliable, consolidated data.
  
  
• Encourage suppliers to come up with innovative ideas and share their knowledge. This can take the form of brainstorming sessions or closer collaboration. Encouraging innovation helps to improve purchasing processes and find more effective solutions.

Conclusion

Today, the implementation of a Purchasing IS is one of the pillars of a successful digital transformation. It is also an effective way of optimizing the various Purchasing department processes, strengthening synergy and communication with suppliers, and achieving tangible, quantifiable and significant results. By harnessing the potential of a Purchasing IS, companies can gain improved visibility of their supply chain, fine-tune order management and accurately analyze expenditure. The automation of administrative tasks and the introduction of structured workflows are levers for significant time savings and a noticeable reduction in errors. The relationship with suppliers is a fundamental element not to be neglected. By promoting the sharing of information and ideas, stimulating innovation and building relationships based on trust, companies can solidify their supply chain and guarantee long-lasting, fruitful partnerships. Finally, by regularly assessing their performance, adapting their strategy in line with realities on the ground, and relying on key indicators such as the purchasing performance index and supplier churn rate, it is possible to draw up a rigorous assessment of their success and implement appropriate corrective measures where necessary.

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