Best Practices in Spend Management
Part 1: Minimize Requisition to Order Cycle Time
Requisition to Order Cycle times are an indicator of a company’s agility and efficiency. It could be argued that faster cycle times just encourage more spending, but it is essential to match Requisition-to-Order cycles to the speed of your business. Slow approvals result in
- Delayed purchasing of goods and services needed for business-critical projects, maintenance and repair operations, or travel tickets
- Small quantity and emergency purchases at higher cost, giving buyers little room to obtain best terms
- Low adoption rates when employees bypass a cumbersome procurement process.
Aberdeen Group’s eProcurement Benchmark studies report Requisition-to-Order cycle times of Best-in-Class enterprises at about one-fourth of the average of peers, resulting in more than double of the amount of spending under management.
Paper or e-mail based requisitions are prone to delays in the approval cycle. Requisition forms are often lost, held up in internal mail, or buried in overstuffed e-mail inboxes. When an approver is traveling, on vacation, or sick, requisitions tend to get stuck in the approval chain.
Five Suggestions to accelerate the Requisition-to-Order cycle
Eliminate the paper
- Electronic Requisitions can be automatically routed for approval, complete with scanned attachments of supporting documents.
Manage by exception
- Minimize the number of approvers for routine requisitions.
- Build dynamic approval workflows with additional approvals based on amount, project, GL account, and budget status. Examples:
- Requisitions over $1000 require CFO approval
- Higher level approval when budget is exceeded
- Special approval for designated GL accounts, like IT equipment or capital acquisitions.
Implement dynamic approval workflows
- Implement easy to maintain approval workflows
- Approval rules based on role or position easily adapt to organizational changes
- Set up e-mail alerts and reminders
- Set up alternate approvers to avoid bottlenecks when the primary approver is not available.
Facilitate purchasing from preferred sources
- Encourage use of pre-approved vendors and products with favorable terms
- Shopping lists for recurring requisitions
- Requisitions against vendor contracts or in-stock inventory materials
- On-line vendor catalogs and integrated PunchOut with negotiated discounts electronic ordering.
Provide flexible transaction access – anytime and anywhere
- Web-based
- Mobile
- Approval by e-mail response.
Supply the necessary information for approvers
- In-line attachment of documentation (quotes, specifications) for each line item
- Customizable questionnaires for justification
- Fully detailed transaction log and audit trail.
Efficient Requisition to Order cycles result in a quantifiable increase in spending under management, materials utilization, and purchases for preferred vendors at favorable terms.
About Paramount Technologies
Paramount Technologies is a leading global provider of web-based / mobile spend management and workflow automation solutions for midmarket and enterprise organizations. Our WorkPlace solutions automate Requisition, Procurement, AP Invoice Automation, Materials Management, Project Time, as well as Travel and Expense transactions. The WorkPlace suite of products can be deployed on premise or in the cloud and is universally accessible from any browser-enabled device. WorkPlace 2014 integrates seamlessly with Microsoft Dynamics, Sage, Blackbaud and other financial systems. Established in 1995, Paramount is a private company headquartered in Walled Lake, MI with regional offices across the United States and Canada.
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