The Best Purchasing & Procurement Softwares in Comparison

Purchasing Software Definition: What is Purchasing Software?

Purchasing software assists purchasing staff in a variety of ways with their daily tasks.

Today, such solutions are often cloud-based tools. They mainly include features for ordering products, controlling related approval processes, organizing inventory, and managing quotes and invoices. Processes associated with these features can often be automated using purchasing software.

The goal is to achieve significantly more efficient and error-resistant inventory management within the company.

Why should companies use purchasing software?

Inventory management and purchasing, which is located within it, are undoubtedly elementary processes for the business capability of most companies. Buyers procure goods and services that the company needs for its operation. These include raw materials, materials, and other operating resources for production. This ensures a smooth operational process. If necessary elements are missing or are not available in sufficient quantity, this could cause production stoppages, rejected orders, inefficient processes, and other negative consequences.

To keep everything running smoothly, purchasing managers must manage inventory, control incoming goods, and keep an eye on the need for raw materials or materials. Orders must generally be processed quickly and reliably to ensure continuous efficiency. The challenge is always to determine the best price for the respective product and to organize financing securely. Numerous documents are associated with these and other typical purchasing processes.

It does not need to be further explained that there can quickly be errors with all these building blocks and corresponding to-dos under a completely manual approach, which may have long-term negative effects. On the other hand, if good purchasing software is in use, there is very good security. Thus, such tools independently detect needs and can even order products needed again and again without further intervention by the buyers. They also provide a centralized overview of dealers relevant to the respective company and deliver the best prices. In addition, all important documents are centralized and can be managed via the programs.

Especially in larger companies or in those that generally have a high purchasing volume, purchasing software is not "just" a strong efficiency pusher. Without corresponding automation, such volumes can actually no longer be served appropriately.

How does shopping software work?

Purchasing software is now often offered as a SaaS cloud solution. This means that it no longer needs to be installed on your servers or individual desktop computers. With a log-in, employees have full access to the booked program components.

How the tool ultimately works in practical use, of course, primarily depends on the integrated features. Purchasing software can support many standard tasks from individual parts of the ordering process to complete purchasing. The following areas are typically covered by software for the purchasing department.

• Automated demand notification: One of the most important tasks of purchasing is to determine in time what is needed when. Purchasing software can keep an eye on the inventory and automatically issue warnings as soon as the inventory of a particular product falls below a set limit.

• Document management: Large quantities of long-term relevant documents always accumulate in purchasing. These can be centralized and efficiently organized within a purchasing tool. These include offers, digitized delivery notes, open and settled invoices, contracts, etc.

• Supplier overview: Purchasing software often includes ordering systems with extensive catalogs. These make it possible to find required products or services within the respective solution and to carry out price comparisons. Ideally, you always get the best price with the cheapest delivery times.

• Ordering process: Ideally, offers and prices can not only be viewed and compared, but orders can also be initiated directly via the software. With the help of pre-configured standard documents, orders can be issued quickly and partly automated.

• Analytics: A wide variety of data is also generated by tools for purchasing management or the processes carried out with them. Some applications can directly evaluate these and use them to optimize purchasing. Those responsible always have all important information in view and can, among other things, quickly make profit-and-loss calculations.

What are the advantages and disadvantages of software for the purchasing department?

Some clear benefits of purchasing software have already been highlighted. The focus here is on a strong rationalization of typical procurement processes. A summary of the advantages that can be derived in detail is given below.

• Process acceleration: An purchasing software automates the procurement process and allows companies of all sizes to perform tasks faster. This ultimately means that purchasing runs more smoothly and deliveries arrive more punctually. Companies can achieve this acceleration and increased punctuality over a purchasing software with little effort.

• Relationship management: The customer-supplier relationship is the backbone of every purchasing process. A good flow of information and reliable orders can achieve price and delivery advantages as well as other benefits. Purchasing software rationalizes the communication and purchasing process that takes place in the course of this. It helps in recording and storing historical data from suppliers, collects purchase requests, sends orders with just one click (or even automated), records invoices, and organizes payments. Everything runs reliably, which tends to make suppliers happier.

• Risk reduction: It is always a very critical matter when a certain product is urgently needed and it turns out that the stock does not cover the current demand. In the course of classic purchasing processes, although records are kept to avoid such bottlenecks. Corresponding warehouse documentation is then stored decentrally in the form of confusing spreadsheets. They are quickly overlooked or misunderstood. Purchasing software can help. It can be programmed to track stock quantities and update them in real time when something is checked out of the warehouse. Automatic notifications ensure that an order is sent out early. This reliably excludes significant risks, such as a production stop or orders that cannot be processed due to lack of material.

• Cost reduction: Another important area in which purchasing software proves useful is cost reduction. An ideal purchasing software not only supports those responsible for purchasing. It also helps them reduce costs by centrally providing a wide range of suppliers and their prices. With purchasing software, buyers have the opportunity to inform themselves about different suppliers, check their prices and consider their conditions. In the end, the best products can be procured at the lowest cost. Better prices can be negotiated even further with good relationship management and accounts payable accounting tools.

• Expenditure control: Companies often find themselves in a procurement dilemma. Either they severely limit spending, thus inhibiting the purchasing process and ultimately possibly their productivity. Or they give employees more leeway, but thereby increase the risk of unnecessary investments. If employees order goods "at will" or uncontrollably, this easily leads to a situation where several people or departments purchase identical means. There is no centralized system and at worst not even individual purchasing managers. Purchasing software changes that. With this, budgets can be set and of course only those employees who have access are entitled to order. Purchases are also to be bound to certain approval processes. This makes it even easier for employees to have a say in the purchasing process. But the procurement team retains overall control.

• Transparency: Purchasing software brings increased transparency. On the one hand, it allows all purchasing processes and important documents in this regard to be managed in one central location. On the other hand, it also enables broader insight into the course of procurement processes through analytics. This allows those responsible to receive a detailed overview at any time and also to recognize in the long term what works, what does not work and whether there might be opportunities to save on purchases.

Purchasing software can bring some disadvantages or challenges along with all the advantages. The following difficulties are typical.

• Excess of functions: Purchasing teams that still work more or less classic or manually can be overwhelmed by the possibilities of purchasing software. Too many features confuse users and can ultimately impair the efficiency of the solution. Maybe its potential isn't even used. The good news, however, is that many purchasing softwares can be adjusted flexibly. Companies have the choice – for example, one can start with a low level of support. In addition, many provider companies offer help in the form of guides, white papers and other documentation. Some are even available for training.

• Approval Complexity: If purchasing software offers the opportunity to review purchasing processes in more detail, those responsible will regularly take advantage of this option. While this option is generally beneficial, it can also unnecessarily lengthen the procurement process.

• Supplier Onboarding Problems: The use of purchasing software is usually very popular with suppliers. They can therefore generally bring their offers more quickly and easily to their customers than via the classic purchasing route. Nevertheless, some companies may have difficulties adapting to such a system. Especially small companies often still work according to traditional patterns. Interested parties should therefore look carefully during their research for a suitable procurement software to what extent their partners support it.

How Do You Choose A Suitable Purchasing Software?

Procurement software can provide tremendous support to businesses. But, not all solutions are suitable for every operating context. The various providers each have their own advantages – there are different sets of functions, use cases and pricing models.

Choosing a solution largely depends on the budget, the required features, and the growth of the respective company. Against this background, those responsible should pay particular attention to the following factors when looking for a suitable tool.

• Adaptability: The ideal purchasing solution fits exactly to the specific requirements of the company. For this reason, an off-the-shelf software product is rarely the perfect option. Experienced suppliers know that adaptability for their customers is very important and provide flexible packages or modular programs. These can then be further adapted by the in-house development team or the buyers themselves. A purchasing tool, for example, could offer the opportunities to automate order processes, create custom workflows, and define custom roles and special permissions. It should also be possible to extend applications via plugins or integrate them into existing system architectures via APIs. The goal should be to make typical procurement processes as a whole more efficient using software.

• Cost: There are indeed different billing models for purchasing software. However, most providers make their solutions available on a monthly or annual subscription basis. Well-equipped programs start at around 20 euros per month. But, there are also extensive applications for about 500 euros and more.

Some provider companies offer free trial versions or offer discounted rates to small teams and start-ups. The range of functions is of course greatly restricted here.

• Usability: Those responsible should choose their purchasing software also based on user friendliness. For example, even the most powerful solution never unleashes its full potential if it is too complex for users and therefore perhaps only used in parts. Here money is quickly lost. Instead of betting on a possible comprehensive program, employees should first be better trained in typical procedures. Many developer companies offer the opportunity to book relevant courses and to scale their solutions flexibly based on competencies.

• Scalability: Companies ideally record steady growth. The workload for the purchasing department increases proportionally. A purchasing software must therefore not only handle more procurement processes, but also provide additional functions to continue to carry out the former efficiently. SaaS procurement software can almost always be flexibly scaled upwards – both in terms of progressing order volume and in terms of extended functions.  Those responsible should nevertheless let flow into their decision before buying what is probably needed in the future and whether the respective software can really cover this need.

• Customer support: When using purchasing software, questions or problems that can only be solved by the developer company or its experts often arise. If a corresponding processing takes a long time, this can have a very negative effect on inventory management and other related processes. Those responsible should therefore definitely take a look at the quality of the support when looking for a suitable program.

What do purchasing softwares cost?

Purchasing software is offered in different distribution and pricing models:

Most solutions are so-called Software-as-a-Service services. These programs are hosted in the cloud, rather than on servers or computers in the company. This makes them relatively inexpensive. However, there are still also on-premise applications - that is, those that are installed on site. These are often less flexibly scalable. But, they offer more control for their users.

As a rule, software for the purchasing department can be used in subscriptions with monthly or annual billing. Well-equipped programs start at around 20 euros per month. However, there are also extensive applications for approximately 500 euros and more.

Some provider companies offer free trial versions or offer discounted rates to small teams and start-ups. The range of functions is of course greatly limited here.