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Table of Contents

• What is Procurement Software?
• What are the common features of Procurement Software?
• What are the benefits of Procurement Software?
• How much does Procurement Software cost?
• How to choose the best Procurement Software
• Common questions to ask before choosing the best Procurement Software

What is Procurement Software?

Procurement software helps businesses manage their purchasing cycle—from creating purchase orders (POs) to paying suppliers. The software provides a centralized platform to manage interactions between all stakeholders involved in the purchasing process, including buyers, vendors, approvers, and receivers. Procurement tools enable businesses to streamline their procurement processes, reduce manual errors, and increase efficiency. This reduces the time and resources required to manage procurement and enables businesses to focus on more strategic activities, such as supply chain risk mitigation and supplier relationship management.

Procurement software offers real-time visibility into the procurement process, helping businesses track and manage purchase orders, supplier performance, and inventory levels. It helps identify potential issues before they become major problems, allowing users to make data-driven decisions.

What are the common features of Procurement Software?

• Supplier management: Manage supplier information, interactions, supply and payment history, and communications via features such as supplier profiling and qualification, contract negotiation, order tracking, and supplier performance monitoring.
• Requisition management: Review, approve, and cancel requests to procure goods and services. Requisition management enables businesses to control and standardize the procurement process and ensure compliance with procurement policies.
• Purchase order management: Track and manage the purchase order lifecycle, from creating and issuing POs to procuring goods and making payments. The purchase order management feature streamlines the procurement process by ensuring that all purchases are made in accordance with established policies and budgets, while also providing real-time visibility into the status of orders and payments.
• Invoice processing: Manage supplier invoices—from capturing, validating, and approvals to payment processing. This feature also helps businesses improve their cash flow management by accelerating the payment process and reducing the risk of late payments.
• Cataloging/categorization: Create and manage digital catalogs of products and services with details such as product description, specification, and pricing. This feature includes catalog creation and maintenance, classification of items into categories and sub-categories, and search and filtering capabilities.

What are the benefits of Procurement Software?

• Shortens business cycle: Procurement software automates the purchase order process and lets users send digital purchase orders to suppliers and vendors. This reduces the overall procurement time and speeds up the supply chain process.
• Improves inventory control: With a procurement software solution, inventory managers can monitor the inventory levels and set threshold limits to automate the reordering of items. For example, an organization that uses procurement software can set up automatic reorder points for frequently used or most demanded items, ensuring that inventory is replenished before it runs out. This helps ensure sufficient stock quantity at all times, reducing the risk of stockouts and overstocking.
• Eliminates paperwork: By automating most procurement processes, including invoicing and PO creation, procurement software eliminates the need for manual paperwork. This reduces delays and errors associated with manual processing and increases efficiency. The software solution also reduces the cost associated with paper printing and physical storage. Digital POs are more secure than physical copies, which can be easily forged, stolen, or lost, leading to a dispute between supply chain partners.
• Provides detailed expense reports: Procurement software provides detailed expense reports that enable businesses to monitor every spend made by the company on purchasing materials. This brings transparency to accounting and supports businesses while estimating budgets for the next procurement cycle. Having a detailed record of historical purchases also enables businesses to identify their critical needs and the quantity of consumed items, which helps set procurement targets for the next cycle.

How much does Procurement Software cost?

Most procurement software products are priced on a “per month” basis, and their entry-level pricing plan ranges from $10 to $100+* per month. An enterprise product that’s priced higher may include additional features such as third-party integrations, supplier portals, and advanced reporting.

*The pricing included is for the entry-level/lowest-priced offerings found on vendor websites as of April 18, 2023.

How to choose the best Procurement Software

• Identify the gaps in your procurement process. Before selecting procurement software, identify the gaps in your current procurement process. This step will help you determine which features are most critical to your organization. For example, you may need software to streamline the purchase order process, automate supplier onboarding, or provide real-time visibility into spending data. Additionally, to make the right choice, you should consider factors such as the size of your organization, the number of suppliers you work with, the types of goods and services you purchase, and your budget.
• Evaluate data-driven analytical capabilities. Your shortlisted software solution should provide robust data-driven analytical capabilities such as spend analysis, supplier performance metrics, and contract compliance monitoring. With built-in analytical capabilities, businesses can dig into past procurement data (including items, volume, speed, supplier performance, and other details), thereby assisting in drawing actionable insights from current procurement data and making fact-based decisions.
• Assess the purchase order approval and delivery process. One of the most critical aspects of procurement software is its ability to streamline the purchase order approval and delivery process. Look for software that allows you to create and manage purchase orders, automate the approval process, and track deliveries in real time. This will help you reduce manual errors, improve supplier communications, and increase efficiency.
• Check forecasting capabilities. Procurement software should also provide forecasting capabilities to help you anticipate future demand and plan inventory. Look for software that provides accurate demand forecasting, inventory tracking, and replenishment management features. This will help you optimize your inventory levels and reduce the risk of stockouts or overstocking.

Common questions to ask before choosing the best Procurement Software

• Is your software mobile-compatible?

Many procurement software providers offer mobile-compatible interfaces or mobile applications, allowing users to access the system from anywhere using their smartphones or tablets. This helps users view purchase orders, approve requisitions, communicate with suppliers, and manage other procurement processes on the go.

• What analytical capabilities are there in your software?

Procurement software typically provides a variety of analytical capabilities, including spend analysis, vendor performance analysis, contract compliance analysis, and more. These features can help procurement teams identify areas for cost savings and process improvement.

• Does your software offer integration with SCM and ERP tools?

Procurement software often offers integration with supply chain management (SCM) and enterprise resource planning (ERP) tools. This improves the flow of information between procurement, supply chain, and finance teams, enabling real-time visibility into inventory levels, purchase orders, and other key metrics. Integration with SCM and ERP tools can also help optimize the procurement process and reduce errors such as incorrect data entry, over- and under-ordering, and non-adherence to procurement policies.