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Written by Marijn Overvest | Reviewed by Sjoerd Goedhart | Fact Checked by Ruud Emonds | Our editorial policy
Procurement Tracking — Everything You Should Know
Key take-aways
- Procurement tracking involves overseeing activities, analyzing data for efficiency and cost-effectiveness, and aiding in decision-making processes.
- Minimizing costs, preventing risks, and identifying early is crucial for maintaining competitiveness.
- Purchase orders, delivery, compliance, budget control, and supplier performance.
A very vital part of the procurement process, procurement tracking allows procurement professionals and businesses to ensure that they are optimizing their procurement and spending activities, mitigating risks, and providing transparency in the whole procurement process.
In this article, we are going to explore what procurement tracking is, its importance in business and the tools to be used when conducting it for its efficient execution.
By the end of this article, you will have an idea of the importance of procurement tracking in your business and which procurement tracking software you would want to utilize.
Procurement Tracking: Why is it Important?
To stay at the forefront of today’s rapidly evolving business environment, procurement tracking plays a crucial role in monitoring the procurement process. It allows businesses to track and improve their procurement activities and have a transparent outlook of their procurement process. It also enables managers and businesses to minimize costs, prevent and mitigate risks, and essentially identify issues and problems early on in the procurement process.
Procurement Tracking:Key Elements
Just like the procurement process, procurement tracking involves key elements as well. These elements are the main focus of monitoring the procurement process of your company and are the factors that determine whether the procurement is efficient and feasible. The key elements are typically:
1. Purchase Orders
Purchase orders are where the monitoring of the creation and approval of purchase orders comes in. It typically looks for details such as supplier information, item descriptions, quantities, prices, or arrival dates.
2. Supplier Performance
The quality, timeliness, and adherence to contractual commitments of suppliers shall be monitored. Tracking Key Performance Indicators (KPIs), conducting supplier evaluations, and maintaining supplier scorecards can be a part of this process.
3. Budget and Cost Control
Procurement expenditures, monitoring variations in the cost and identifying opportunities for savings, and avoiding unnecessary costs shall be monitored in accordance with the approved budget. It also ensures that the procurement process is aligned with financial targets and objectives.
4. Delivery and Logistics
The status of goods and services purchased, such as their delivery timelines, transportation times, or receipt is monitored. This allows for the identification and implementation of measures to mitigate any delays or obstacles in the supply chain by organizations.
5. Contract Management
Contract Management is tracking the contractual lifecycle, including contract creation, renewal, and termination dates. Compliance with the agreed terms and conditions of a contract, as well as respect for the obligations arising from it, shall also be monitored. Documents concerning the contracts shall also be undertaken.
6. Compliance and Risk Management
Throughout the procurement process, monitoring compliance with the applicable legislation and regulations is crucial. This includes checking standards of ethics, legal requirements, supplier diversity, and minimizing any risk that may arise in connection with the procurement activities.
7. Performance Metrics and Reports
Involves data collection and analysis of key procurement metrics such as cost saving, supplier performance, timeliness of the delivery, or the effectiveness of the entire process. These data and inputs are used for the creation of reports and insights that aid in identifying trends, and areas that need improving or support strategic decision-making.
Implementing EffectiveProcurement Tracking
To harness the full benefits and potential of procurement tracking, organizations should consider the following key steps:
1. Define Clear Objectives
In order to be in line with the company’s overall purchasing strategy, clearly identify the objectives and targets of procurement monitoring. It shall include the identification of key performance indicators and metrics that will be monitored and analyzed.
2. Invest in Technology
Leveraging procurement software or enterprise resource planning ERP systems offering a robust tracking and reporting capability. These tools allow for automated, integration to suppliers and visibility in procurement data at any time.
3. Establish Data Governance
In order to guarantee the accuracy, integrity, and security of data, a Data Governance Framework shall be established. Specifies data ownership, develops standards on data quality, and enforces policies and procedures for the collection, storage, and access of data.
4. Regular Monitoring and Analysis
In order to detect trends, patterns, and areas for improvement, continuous monitoring and analysis of procurement data is required. To monitor performance against targets and to take corrective action where necessary, KPIs and metrics shall be regularly reviewed.
Benefits ofProcurement Tracking
Procurement tracking offers great benefits to businesses as it allows for a more structured procurement process all while providing transparency and information used to aid procurement professionals in strategic procurement decision-making. Here are some of the benefits that procurement tracking provides:
1. Enhanced Efficiency
Procurement Tracking is a tool that enables organizations to streamline their procurement procedures, eliminating inefficiencies. By tracking Key Performance Indicators (KPIs) such as order cycle time, supplier performance, and on-time delivery, businesses can identify areas that need improving, optimize the allocation of resources, and minimize or avoid delays. This approach promotes efficiency throughout the whole procurement process.
2. Cost Savings
Cost savings are achieved through a number of means, by accurately and promptly monitoring the procurement process. By applying historical data on pricing, quantities, and terms, it enables organizations to negotiate favorable terms with suppliers.
Furthermore, it enables businesses to implement strategic sourcing practices, strengthen their suppliers, and bargain volume of discounts through monitoring expenditure patterns and identification of cost drivers. These cost reductions are a great contributor to the improvement of an organization’s financial position.
3. Risk Mitigation
In risk management, there is a key role to be played by procurement monitoring. Organizations can find possible risks and take proactive measures to reduce them in the framework of thorough monitoring of supplier performance, quality control as well as compliance with contractual obligations. In order to minimize possible supply chain disruptions, timely identification of supplier issues or interruptions can speed up the process by way of searching for alternate suppliers or amending terms and conditions.
4. Data-Driven Decision Making
Procurement monitoring gives us a wealth of data, which can be analyzed to determine what is happening. Organizations can obtain visibility of trends in procurement and supplier performance, as well as demand patterns with the use of modern analytical tools and technologies. This insight allows decision-making to be based on data which leads to more informed choices in supplier selection, contract negotiations, and procurement strategies.
5. Transparency
Transparency and responsibility in the procurement process are promoted through the tracking of contracts. It is designed to give a complete overview of the procurement activities to stakeholders, including management, auditors, and regulatory authorities. Transparency is also conducive to reducing the risk of fraud, enhancing compliance with regulatory requirements, and promoting trust between stakeholders. It provides an opportunity for organizations to prove that they comply with sustainability and ethical sourcing standards.
ProcurementTracking Software
There are several procurement tracking software available online that provides great help when it comes to managing procurement processes effectively. This software offers many features that are essential to execute the key elements of procurement tracking. Here is a few useful procurement tracking software:
1. Procurify
Procurify is equipped with a variety of tools that optimize your Procurement tasks. These include purchase management, expense filing, and workflow automation. It also has a great budgeting toolkit that simplifies the planning and management of expenses. The software also comes with its native mobile application for iOS and Android devices. This allows you to access your system wherever and whenever you want, which makes it great for agile teams who are always out and about. A centralized procurement space, where the user can take charge of the procurement process with just a simple push of a few buttons.
2. Paramount Workplace
Paramount Workplace Offers a 360-Degree View of Data and gives the user all important data that is important for the company’s procurement process. It comes not only keeps tabs on purchase orders, requests, and invoices but also records expenses, labor costs, and budgets. The program boasts powerful artificial intelligence and machine learning to help the user with procurement tasks.
3. Coupa
Coupa offers functions such as Procure to Pay, which allows for automation and centralization of procurement processes from requisitioning and purchasing to receipt of goods and services, as well as processing payments. Sourcing and contract management enables businesses to manage their sourcing activities such as choosing suppliers, negotiation, and contract management. Analytics and Reporting allow businesses to gain insight into their activities and spending patterns that aid in identifying cost-saving opportunities.
4. Kissflow Procurement Cloud
Kissflow Procurement Cloud provides end-to-end procurement solutions to help with your procurement process. It also helps improve vendor relationships, thanks to the software’s ability to collect all vendor and supplier data into one platform. This makes it easier for users to set up their metrics. The product software is easy to integrate with other accounting tools, ERP systems, and other business software.
Conclusion
This article sheds light on the significance of procurement tracking in the business environment. It outlines the definition of procurement tracking, its importance, key elements involved, and the steps to implement effective tracking.
Furthermore, the article emphasizes the benefits of procurement tracking, such as enhanced efficiency, cost savings, risk mitigation, data-driven decision-making, and transparency in the procurement process. The inclusion of related courses and recommended procurement tracking software enhances the practical value of the content.
Frequentlyasked questions
What is Procurement Tracking?
Procurement Tracking is the process of monitoring and managing procurement activities. It involves systematically tracking, recording, and analyzing data or metrics relating to procurement activities to improve efficiency, and cost-effectiveness, comply with business policies and procedures, and ultimately aid in important business decision-making.
Why is it important?
It allows businesses to track and improve their procurement activities and have a transparent outlook of their procurement process. It enables managers and businesses to minimize costs, prevent and mitigate risks, and essentially identify issues and problems early on in the procurement process.
How to implement procurement tracking?
Procurement tracking can be done by focusing on the business objectives such as data security, monitoring data, and making reports. There is also software available that allows for easy and effective procurement tracking.
About the author
My name is Marijn Overvest, I’m the founder of Procurement Tactics. I have a deep passion for procurement, and I’ve upskilled over 200 procurement teams from all over the world. When I’m not working, I love running and cycling.
