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Purchase Requisition Process: Digital Transformation of RFP

Business | January 16, 2023 | By Kausika Raajan Varatharaajan Purchase Requisition Process

Purchase Requisition Process 

Launching a product in the market can be stressful. It requires complete coordination across internal teams as well as external suppliers. And the problem most companies face is siloed pieces of information. This leads to teams working with disconnected data, which makes it difficult to consolidate, and soon, the data expires rendering no use to anyone. In other words, a lack of actionable data is needed for timely and critical decision-making.

Sourcing and Procurement teams play a pivotal role in ensuring successful product launches. Starting from selecting suppliers for the required parts, negotiating the best possible terms and conditions, tracking the materials till they reach the plant to ensuring they are delivered at the right quality. There is so much data generated and sometimes duplicated in this process that it becomes difficult for procurement teams to keep track of every change since these details are stored on several platforms. Emails, spreadsheets, database management software, and the like. So at almost every point leading up to the program launch, teams work with confusing, inaccurate, and out-of-date data. This puts them in firefighting mode, thus derailing the product launch schedule.

Digital transformation of the entire procurement process enables process streamlining and drives transparency across the supply chain. And it all starts with taking the first step.

Digital transformation of request for purchase process 

Before starting to work on a project/program, companies discuss, decide, and lock the timelines for every activity till the program launch. Though Sourcing and Procurement should be involved in product development right from stage 1, it is not so. Most companies work with Procurement only when materials need to be procured. So when there is a need for material, the stakeholders, mostly members of the engineering team raise a purchase request. And a process as simple as a request for purchase is made complicated when executed manually. Thus to ensure simplified process execution, streamlined information flow, and in-context communication, there is a need for software that digitalizes the entire process and not just digitizes it.

Online RFP tool: A sourcing software

Should capture information relevant to Sourcing and Procurement

In a typical manufacturing organization, there are several parts that need to be procured. And each data pertaining to that part is organized by commodities, region, and other attributes. Also, each team has its own language and way of working with the same part. Design and Engineering work with engineering drawings and Bill of Materials (BOM); quality works with PPAP, accept/reject rates; program management is more focused on the volumes, stage gates, etc. And, Sourcing and Procurement work with commodity types, quantity, request for purchase and PO numbers, etc. For example, a simple cap screw or a gasket will be sorted based on the raw material/commodity used, region of manufacture, component size, etc.

Software that replaces the manual purchase request process should be capable of understanding and transferring information to the procurement team and presenting them as per their needs. One way to do this is to implement mandatory field control in the purchase request process. For example, defining the commodity type for every part/component can be made mandatory, before a request for purchase is raised. Otherwise, buyers might need to spend hours, if not days consolidating all the requests and defining the commodities. And then they start working on the parts.

Should be capable of seamless design data transfer

When a request for purchase is raised to the buyer, he/she reviews the parts requested. The data, either a BOM or a part list, is stored in a spreadsheet and shared via email. Buyers receive the data and review it to understand the requirements. For this they might need 2D drawings; or if they need a detailed view of the part in case a new part or when new suppliers have to be developed,  they might need a 3D model.

In most cases, the plight of the buyers is to constantly follow up with the design teams for the design data. And the process is not a simple copy and paste. Design teams share the 2D drawings via emails or upload them to a common file-sharing platform. If the file size is large, they have to liaise with their IT teams for access to FTP servers. A highly time-consuming activity. Also, over time the data gets buried – digital dust!

A sourcing platform should be capable of integrating with PLM or the tool that stores the design data and should be able to fetch the data automatically and securely when called for it. So when buyers receive requests, the necessary 2D drawings / 3D models are there already.

Should be able to fetch the legacy data

The moment buyers receive the purchase request they may want to look at the past purchase history for the same part or a similar part. So they need to access the ERP system to forage for data such as:

      • When was the same or similar part purchased?
      • Who were the list of suppliers who responded to the RFQ?
      • Which suppliers were rejected and why?
      • What transpired during the negotiation?

Consolidating this information takes a day or two, or sometimes even more. The problem is that ERPs were built to record and monitor transactions and they do just that. But there are a lot of missing pieces which are critical to the sourcing and procurement processes. Like the purchase requisition to purchase order digital thread.

So, sourcing software should be capable of integrating with the ERP system along with PLM. The legacy data should be fetched automatically and be readily available when needed.

Should enable assigning the parts to the buyers 

In general, when the buyers receive purchase requests from various departments, the requests are consolidated, discussed among the team, and then distributed accordingly for further action. This process is handled by spreadsheets. The difficulty here is that the sheet used to distribute the parts will be new for every other project. Imagine the situation when a company works with hundreds of projects at the same time. And the company definitely cannot employ different buyer teams for every single program. So when there is any organizational level change, or the assigned buyer has to work on some other urgent part requirement, it becomes difficult to again consolidate, track, and manage all of this data.

Thus, the procurement software used should have the capability to assign the parts to the buyer based on the commodity. Also, the software should allow procurement managers to have a 30,000 feet view of what is happening sourcing-wise. So that decision-making is data-based and not merely a hunch.

All in all, Procurement software should be capable of handling the entire stretch of the purchase requisition process. So that when buyers receive a purchase request, they have all the necessary details needed. And they can fetch data in seconds when the need arises.

Zumen Source-to-Pay is a comprehensive software built with industry know-how that enables the complete digital transformation of the entire Source-to-Pay process for manufacturing companies. So, the moment the purchase of a part is requested, Zumen with its incredible connectivity with PLM and ERP enables the users to see all the relevant information at every step of the Source-to-Pay process so that stakeholders can collaborate and make the right decisions.

To know how Zumen enables the complete Source-to-Pay process, schedule a free demo, or contact us at [email protected].

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