5 benefits of procurement automation in credit unions

Throughout the past few years, financial institutions have been focused on digital transformation and bringing innovation to their systems with the help of technology. Credit unions are unique in the financial service industry due to their member-owned structure. Despite that, COVID-19 has dramatically contributed to the acceleration of digital transformation across the entire banking ecosystem. 

As companies seek to add value through supplier management, compliance, and risk, the role of procurement in financial services has become more critical than ever. Procurement teams can use different procurement automation tools to make vital management decisions in credit unions and help maintain stability during turbulent times. 

What is Procurement Automation?

The process of automating manual, repeated tasks, and labor-intensive operations in the procurement process are known as procurement automation.

Procurement automation frees up the procurement team to focus on other essential business tasks while speeding up processing and minimizing mistakes by allowing procurement processes to self-execute with the help of procurement automation software.

Top 5 Benefits of Procurement Automation In Credit Unions

Here are the five benefits of procurement automation software in credit unions: 

1. Spend Management

A survey conducted by Delloite found that 70% of CPOs believe that procurement has lately seized control of significant service expenditure categories such as marketing, travel, training, IT services, consulting, etc.

That has become possible because of procurement automation, which aids in managing the amount of spend in different expenditure categories under management and provides users at all levels of the organization with access to spend data. Procurement automation also enables increased spend visibility, accountability, and collaboration. 

The majority of CPOs stated that their top management expects and supports them in further discovering benefits of automation for the company in service-based category areas.

To complete projects faster while adapting to shifting conditions and requirements, today’s organizations rely heavily on the external workforce, which makes up about 42% of the workforce. But one out of every four projects obtained from service providers is not finished on time or budget, indicating that firms have insufficient insight into their service providers. 

With the help of procurement automation, you can quickly onboard and manage the workforce by automating the entire process. Moreover, you can assign tasks and streamline the process of engaging external service providers, resulting in better compliance and cost savings. Furthermore, you can also centrally deploy, manage, and pay external labor across all facilities and project types through procurement automation software.

If all source-to-pay operations have been automated, organizations like credit unions can readily track and report everything. That also reduces maverick or off-contract spending, improves cost compliance, and flip purchase requisition forms to purchase order efficiently. 

2. Risk Management

Services are typically heterogeneous and often challenging to measure and dynamic. These specifics make it very difficult to control and evaluate the received usefulness and thus increase the perceived risk for procurement. 

Since the service being procured is consumed during the production of services offered by the credit union, a precise specification of the service prior to purchase becomes important but also more complicated. This makes selection of a vendor directly linked to the post-purchase quality review.

Moreover, many services are difficult to produce with consistent characteristics and quality. This further complicates the process of standardizing, counting and valuing them. The intricacies of service based categories often imply that a greater performance ambiguity is very likely.

The most straightforward approach to reducing risk is recognizing it ahead of time and taking preventative measures before it arises. For example, procurement automation software detects threats by analyzing supply market trends, contracts, and supplier performance scorecards in detail. 

Credit unions may monitor performance against SLAs in supplier agreements and receive frequent contract status updates using procurement automation tools to detect and minimize risk.

3. Digitalization 

One of the crucial benefits of procurement automation includes digitalization. By automating your procurement process, you can eliminate the need for manual paperwork right from invoices, SOW’s, tenders to service contracts.

In addition, there is less chance of human error by removing manual tasks such as data entry. Data prone to fewer errors also helps mitigate risks by providing correct information to decision-makers and eventually saves critical resources such as time and costs spent on resolving the error.

Moreover, digitalization helps credit unions to be more sustainable in their approach, by reducing the need for traditional manual resources – such as phones, printers, copiers, networking devices, servers, and computers – by developing, working, and sending various documents electronically.  

That saves a lot of space required by the traditional resources and reduces carbon footprint by eliminating paper.

4. ICW/SMP Relationship Management 

Apart from automating the traditional procurement processes, procurement automation can also help credit unions identify, monitor, and collaborate with Independent Contract Workers (ICW) and Services Micro-providers (SMP).

A procurement automation software makes sure that all independent contract workers fulfill an organization’s standards by cross-checking in terms of response time, company compliance, and the quality of the services they provide.

Through procurement automation, credit unions can initiate processes, submit forms, obtain approvals, and perform actions on their behalf through integrated procurement automation that provides a direct access point to ICWs & SMPs. Therefore, keeping them engaged and improving their relationship with them.

The standardized automation procedure can ensure compliance during vendor selection and produce the information needed for audits, which was previously buried in emails or accidentally lost.

For example, if a credit union wants to hire a firm for maintenance of its building, a procurement automation system will help in the vendor qualification approval process. All the due diligence such as initial vetting, contract management and onboarding as well as approvals from the concerned department is managed by the procurement software. 

Moreover, procurement automation software also offers vendor performance management tools to help you optimise your supplier relationships. For example, vendor scorecards enable you to collect quantitative and qualitative performance data, as well as opinions and feedback on each supplier. You can create scorecards for a category, a group of selected suppliers, or even a different scorecard for each provider on a country-by-country basis.

When it comes to the financial management of the independent workers or service providers, a procurement software can help credit unions to calculate the amount payable to service providers as well as track their payments. Similar to how a credit card can show spending patterns from a single account, procurement automation software can offer the same purchase habits while also helping credit unions stick to a budget.

5. Strategic Sourcing

Procurement automation software includes a range of reports and dashboards that help you keep track of your spending. For example, you may verify that all expenditure is compliant with contracts established by the organization.

The reporting feature makes it simple to keep track of compliance rates and delineates priority spend from uncritical spending, thus establishing robust tracking. All of this saves valuable time for procurement teams and helps them focus on core business processes.

With the help of procurement automation software, credit unions can streamline bidding, negotiation, and awarding procedures and gather, store, and organize supplier data more efficiently. 

Through strategic sourcing, credit unions may evaluate various suppliers side by side, and suppliers can readily see what credit unions are looking for. 

For example, procurement automation can help identify and source subscription-based solutions for applications like video conferencing, voice and chat communications, IT infrastructure support along enhanced cybersecurity measures. Moreover, you can also strategically source a contingent workforce. 

Automating your sourcing processes decreases processing costs and accelerates internal approval processes. In the end, this means more cost reductions with less work. 

When you can begin a sourcing event, access historical expenditure data, and view the market value of services, it’s simpler to ensure you’re receiving the best pricing and participating in fact-based talks with your suppliers.

Conclusion

As the world is evolving into the new norms of technology and automation, financial service industries should never be the ones to lag. With numerous benefits of procurement automation software available to the credit unions, they can harness their full potential and serve their members more efficiently while saving money as well.