You are a company owner or a manager with profit and loss responsibility or a buyer and if you suffer from any of the followings;
Become aware of the purchases only when you see their invoices at your desk?,
You are sick and tired of duplicate and dummy purchases?,
Operating at different locations such as hotel, hospital or bank chains or multiple firms, and the offices at multi locations are not syncronized in procurement?,
Process automation continues to be an important agenda item at your meetings and your buyers are struggling with excells, e-mails and lost in red tape?,
Facing compliance issues in aligning your procurement processes to the corporate governance and transparency is not at a desired level?,
You dream to lower your procurement costs by winning already at the beginning but chance would be a fine thing! you say?,
Your procurement department cannot focus on the core business other than saving the day?
It is all very well but
“Our company has already deployed an ERP system but did not reap the benefit of it” or
“ERP is too much for us, we only aim to improve just the procurement”, you say!
Then we believe that PRM systems would be helpful to you. Before answering how?, let us intoduce PRM which is a new concept to the procurement terminology;
PRM is the abbreviation of Procurement Relationship Management. Likewise the sales teams, it is the CRM of the Procurement. Regardless of production or service sectors, PRM enables a buyer to execute internal and external procurement processes and relations online and realtime basis. PRM is applicable both for direct and indirect purchases. It is perfectly and entirely procurement oriented, and definetly not an ERP, but can be integrated by interfaces.
Existing ERP systems consist of demand and order management modules but excludes the electronic procurement tools such as e-auction, e-RFQ and e-info. A PRM system can provide all procurement prcessess from a to z (Demand Management, Purchase Order Management, Vendor Management, Contract Management, e-info, e-RFQ, e-auction) at the same platform under the same roof. In a word, a buyer if using a PRM system does not need any other software to manage and execute each and every procurement task that means higher efficiency at lower cost.
Regardsless of if it is direct or indirect, product or service, all procurement transactions without any exception can be recorded. Project Centers can be created in order to monitor the direct and indirect purchases that are used at customer projects. The overhead purchases for internal use can be monitored at the Cost Centers. Each project and cost center can have its own approval flow in line with corporate governance. This enables you to prevent unauthorized purchases, therefore no more last minute vendor invoices ruining your cash flow plans.
In PRM, you and your suppliers work interactively and concurrently. It is your suppliers’ liability to create the catalogues and update the products in PRM as per your frame order. The risk of out dated specifications belongs to the vendor. Purchase orders are delivered to the vendors electronically thru PRM. No further delays and misunderstandings in communciation. Your vendors update their deliveries against PO electronically thru PRM. Delivery notes proving the deliveries are still subject to your acceptance and once you approve the delivery, the PO balance becomes firm. The completion rates of your purchase orders are up to date on real time base. No painful and long run reconcialiation periods for the orders, anymore.
PRM ensures your quality and price stability by restricting the purchases only from your approved vendors. This may have an exception only if there is an urgency with no price indication and if there is no approved vendor with delivery capability. Expense Centers in PRM are designed to monitor administrative expenses such as office repairs, car maintenances or travel expenses.
You can audit and query each and every single purchase retrospectively on several parameters that you like to set such as sub company, department, originating person, the purpose, what to buy, amount, price etc. The perception of being monitorable any time may yield an auto-control inside the organization and may prevent duplicate and dummy demand requests before materialize.
In case of an audit, the history of your purchase transactions with all details can be presented to the auditors. You may quantify your work load and value you add such as savings to your management thru such detailed reports, too.
PRM enables you to centralize the procurement of your offices based at different location. You may enjoy the economics of scale as you will go the market for higher volumes at once. It is not only the lower prices but saving time and work force as one single PO instead of each office to create and monitor their own PO.
In PRM, every procurment step and task are digitalized. Excell files, emailsa and red tape are all eliminated. This saves your valuable time from the daily routine and enables you to focus on more strategic tasks such as enriching sourcing base, vendor performance evalaution…..
Tendering is widely used in conventional procurement. Among many methods, rfq and reverse auctions are the most common ones. PRM gives you the opportunity to use both methods electronicaly on the web, even at different combinations; if there are too many items to be purchased and many vendors to be invited, the first round can be e-RFQ’ed while the second round can be e-auction’ed with less participants and more visibility on price levels. It is for sure that you will benefit from the alive and cruel competiton among your vendors. Regardless of what tendering method you apply, who bids how much and when are all recorded timewise and the evaluation table is made ready immediate upon the deadline is over. There is no hassle to gather emails or faxes, no need to merge them in excel files, anymore.
The last but not the least, each company has its own governance to procure, what comes to organizational structures, processes, requirements, expectations. PRM must be designed flexible and clever enough to cover all these differences. Otherwise a fast, economical and succesful PRM deployment will be hard to achieve.
Wish you win already at buying,