The Indian business scene is fast changing, with organisations becoming more aware of the strategic value attached to efficacious procurement activities. As ventures expand and processes get complex, manual procurement methods are not enough, resulting in inefficiencies, compliance issues, and loss of savings opportunities. It has triggered a lot of Indian enterprises to find digital solutions in the form of procurement platform and procure-to-pay systems. But deciding on either of them calls for a critical evaluation of the needs of your business, growth pattern, and operational complexity. This article is intended to advise Indian businesses on this integral decision-making process.
Understanding Procurement Platforms
A procurement platform is a unique digital platform that exists for the purpose of making procurement easier. These platforms usually concentrate on the front end of the process of procurement, namely discovery of suppliers, catalogue management, requisitioning, and purchase order creation.
Key Features of Procurement Platforms
Procurement platforms have a range of advantages that make them appealing to Indian businesses. They offer centralised supplier information management so that organisations can keep detailed supplier databases that have performance indices and compliance documents. Several of the platforms also have digital catalogues on which approved items can be featured with a negotiated price, and this makes it easy for the employees to purchase from their favourite vendors.
These platforms are particularly good at automating the requisition-to-order process, making something that formerly required paperwork into an efficient digital process. Procurement platforms provide a range of helpful features for Indian businesses that communicate with many local and foreign suppliers, including supplier onboarding tools, performance scorecards, and collaboration spaces.
When a Procurement Platform Makes Sense
A standalone procurement platform may well be a perfect fit for medium-sized Indian enterprises that aim to systemise their purchasing procedure without the necessity to rebuild the whole financial set-up. These platforms are particularly helpful in the context of businesses that have complicated sourcing needs or businesses that have a massive supplier base across various regions of India or outside.
Procurement platforms are helpful for industries that have unique procurement requirements, i.e. manufacturing, construction and healthcare industries, due to the specialization and flexibility of those platforms. To add on, organisations pursuing to improve on supplier relationship management but without sacrificing their existing modes of payment and finances might opt for the focused approach of a procurement platform.
Understanding Procure-to-Pay Systems
A procure-to-pay (P2P) system provides an all-inclusive, end-to-end solution that takes care of the entire procurement lifecycle from the stage of requisition to payment of suppliers. These combined systems link up procurement activities to accountability functions, providing a smooth flow of work from department to department.
Key Features of Procure-to-Pay Systems
P2P systems include all the functionality of procurement platforms and essential financial elements like invoice processing, approval workflows for payments and direct interfaces with accounting systems. For Indian enterprises which have to navigate through a multitude of taxation, such as the GST, these systems can automate the tax calculations and keep up with the changing face of financial regulation.
The operations of the accounts payable system in P2P systems manage to automate manual invoice processing, reduce payment mistakes, and collect early payment discounts. They also offer comprehensive financial visibility with reporting tools that monitor spending as per categories, departments, and suppliers, which are critical to strategic financial planning.
When Purchase-to-Pay System Is Viable
Large Indian enterprises with enormous transaction numbers in various locations are expected to enjoy the benefits of P2P systems. Such organisations need an integrated solution of the P2P systems to deal with complex approval processes and financial control.
Businesses that emphasise the need for financial visibility and control, to whom spending will be allocated, and how the procure to pay systems connect the procurement choices with financial results. Industries that must adhere to a high degree of regulatory enforcement, such as Banks, Toy pharmaceuticals, and Public sector organisations, usually see P2P systems as important for compliance and audit trails.
Matters to be Considered for Indian Businesses
Among the factors that should be considered when making your choice, options that are applicable in the Indian business setting include:
Scale and Complexity
Depending on the size of your organisation and the level of complexity of procurement operations, your choice of a procurement system should reflect this. A simple purchase requirement can be addressed by a smaller business with the straightforward use of a procurement platform, while the larger enterprises with multi-location operations are best suited to the full capabilities of a P2P system.
Integration Requirements
Assess how the new procurement technology will be able to work with the existing ERP, accounting, and inventory management systems. Indian businesses quite often rely on the combination of local and international software of solutions, so the integration potential is very important.
Budget Considerations
P2P systems typically have a much greater cost of implementation and longer rollout time than focused procurement platforms. Indian businesses need to be prudent in evaluating their budget limitations and go for features that yield maximum short-term benefit.
Industry-Specific Needs
The procurement challenges are peculiar to various industries. For manufacturing companies, it is likely that materials requirement planning integration becomes more important, while for service organisations, it is more likely that contract management and service procurement capabilities would be featured.
Implementation Best Practices
Irrespective of the solution that you choose, proper planning is a prerequisite for a successful implementation.
Begin with a well-defined procurement intent and define the major problems you are trying to solve. Involve stakeholders of procurement, finance and operations at the early stages of the selection process to ensure the selected solution addresses cross-functional needs. Consider an approach of a phased implementation, starting with a core functionality, followed by more advanced functionality.
Conclusion
The dilemma is that the procurement platform and procure-to-pay system will eventually come down to your organisation’s requirements, growth, and digital maturity. Many Indian businesses will start this journey with the deployment of a narrowed procurement system and will then migrate to become a fully-fledged P2P one as processes see maturity and the organization expands.
Firms such as Procol are in part changing the face of procurement practices all over India through digital procurement solutions designed for the peculiarities of the Indian market. With their appreciation of local business practices, regulatory expectations, and supplier ecosystems, such indigenous procurement technology vendors are in the perfect position to accompany Indian companies in their digital transformation odysseys. Through these tailor-made solutions, the Indian enterprises can find more efficiency, compliance, and strategic value in the procurements, which can contribute to their competitive advantage in the ever-changing digital business scenario.