PROCURE-TO-PAY AUTOMATION SYSTEM

PROCURE-TO-PAY AUTOMATION SYSTEM 1 S.P.KALAIKARTHIKA, 2 A.NITHYA, 3 V.SUGANTHI, 4 M.SUJITHA 1,2,3 Department of Information Technology (IV Year), Dr.NGP Institute of Technology, Kalapatti, Coimbatore 641048, Tamilnadu, India. Abstract- In recent years, the highest rate of paper documents is used for invoices due to increase in consumer purchase. The process time taken to submit and approve the order request along various stages of authority till product delivery by vendor is a long period. Hence the solution for this problem is Procure-to-Pay (P2P) System. P2P application is used to provide solution for manual procurement process in the college along with the vendor details and rating. It contains the details of all approved vendors of the college and provides a place for new vendors to submit their registration request. Procure-to-pay solution is the key to effective supply chain management by integrating the order request function with the purchasing process. Paperless procure-to-pay transactions are way better than manual processing since circumventing the proper authorization channels is virtually impossible. The p2p system gives a chance for the new vendors in the market to register and login to the system to view the quotation requests. They can then submit their quotation to the college and the college chooses the vendor based on the quotation to make an order. Keywords- Procure to Pay (P2P), Administrative Officer (AO), E records, HR Master, in-stock, vendor, purchase, Quotation, PO Purchase Order, Feedback, Rating. I. INTRODUCTION Procurement is mainly used in online purchase websites to generate invoices and maintain the stock. Various companies use ERP and procurement systems to manage their budget and expenses. The syatem can be used in any organization with different procedures of procurement. Procurement of goods is a vital corporate function which is manual in the college to process the procurement requests, approve the request, submit quotation, submit purchase order, receive the product and make the payment for the product. In other words, it is an efficient workflow that starts from procurement and ends in payment for the goods to ensure that expenses are within the college budget and that expenses are kept at a minimum rate. II. CURRENT SYSTEM A. Oracle IProcurement Mark Beveridge [7], (2009), proposed that the organizations using Oracle applications often view the procurement module as an element that should be added to the solution footprint in a later phase. It can offer considerable benefit in addressing issues common to the Procure-to-Pay process of all businesses and can form the first logical building block for developing a broader eprocurement strategy. It uses paper based requisitioning and purchasing. Raising demand on paper involves duplication of effort and requires additional work and time to clarify requirements. It includes buying ordering unapproved or non-essential items and poor compliance to corporate contracts. Offline procurement activity makes it extremely difficult to manage and enforce preferred supplier contracts. Its advantage is it improves efficiency and reduced cost. It has high error rates and inaccuracies generating additional work throughout the process, low automation and long purchasing lead times. B. Estimating the Benefits and Risks of Implementing E-Procurement Peter Trkman and Kevin McCormack [6], (May 2010), proposed that organizations have invested heavily in e-procurement technology solutions. However, the value of the technology-enabled procurement process estimation is often lacking. This paper presents a rigorous methodological approach to the analysis of e-procurement benefits. Business process simulations are used to analyze the benefits of both technological and organizational changes related to e-procurement. The approach is used to estimate both the average and variability of procurement costs and benefits, workload, and lead times. In addition, the approach enables optimization of a procurement strategy (e.g., approval levels). The main benefits of e-procurement are an increase in firm s competitiveness through cost reduction and/or boosted efficiency with inbound logistics. In less process mature companies, ordering and receiving are not connected, and this results to extensive manual matching and resolution before payment. Information systems are manual and decentralized, while information resides on spreadsheets in individual computers. C. ERP and Procurement Systems ERP / eprocurement Systems Work Group [5], (2013), proposed that many organizations, including state and local governments, use traditional ERP systems to integrate their activities across their organizational structure. These organizations are familiar with the challenges of ERP implementation 1

and maintenance. According to a 2012 survey of state and local government IT professionals (subscribers to Government Technology magazine), conducted by the CDG more than half of respondents (53%) representing state and local governments have recently implemented ERP systems or are in the process of implementing one. One reason why state and local governments are implementing ERP and e- Procurement systems more widely, as indicated by the CDG survey referenced above, is due to the systems inherent support and encouragement of common principles of public procurement. Difficulties experienced by organizations with ERP implementation as follows: high cost, lengthy duration of implementation, and requests to customize the ERP software due to business process changes. D. Exploratory Study of E-Procurement Adoption in Indian and Chinese Companies : Case Study with Innovation Approach Vijaykumar R. Salkute and Zonal Manager [4], (2013), proposed that adoption of an E-procurement system offers a company many benefits in terms of tremendous cost savings and efficiency in procurement process. Although the benefits of e- procurement are plenty, the reality is that it is not being adapted to the much extent in developing countries. However, Indian and Chinese companies are planning to successfully adopt strategic approach for adopting e-procurement systems. As the process of e-procurement is a barrier for implementation and integration of existing infrastructure, however in reality the cost savings are overpowering the risks. By using Indian and Chinese firms, the results show that cost benefit is the main driver for companies to adopt e-procurement in India. High purchase volume helps in getting better price and higher tangible cost savings from supplier. It is very expensive to integrate with their existing system. E. Reverse E-Auction Procureedge [3], (2014), proposed that enterprises and organization whether small, medium or largehave used Reverse e-auctions with varied degrees of success in the strategic sourcing cycle. While some buyers use it to drive substantial price reduction, others leverage it as a tool for price discovery and to gain knowledge of the supply market. At the other end of the spectrum, supplier organization have conflicted view on reverse e-auctions by squeezing supplier margins. However, with the right approach, administration and execution, Reverse e-auctions provide significant benefits to buyers ad suppliers by delivering value and improving business outcomes. Reverse e-auction in an alternative tactical sourcing tool to support the negotiation process and require careful administration and execution. Reverse e- Auction is an online real-time dynamic negotiation process between a buying organization and a group of pre-qualified suppliers. F. Googlization and Amazonization of Procurement Procureedge [2], (2014), proposed that making an informed choice on sourcing and procuring best quality products and service at the best price is challenging at any time. However, business is beginning to realize the potential of indirect procurement in driving cost saving and adding business value. Striving to factor in these factors and address cost pressures, CPO s are looking for an integrated platform delivery model that focuses on it transformation and process control to increase efficiencies in indirect procurement. It is used to drive engagement, visibility, usability and flexibility. The Strategic souring, contract management, procurement insight, operational procurement is improved in this system. Market ready software and tools that are available to assist companies in indirect procurement often have poor user interfaces and nonintuitive system. G. Study of E-Procurement Implementation Impacts: A Case Study in PT. PLN Achmad Nizar Hidayanto, Yuanisa Ditari, Dina Chahyati [1], proposed that E-procurement gains its popularity through people s trends of using the internet. Transparency factor of e-procurements is expected to reduce corruption in government projects, as an effort to achieve good corporate governance (GCG). This study focused on the gap analysis of conditions in PT. PLN before and after the implementation of e-procurement. This study concluded that the implementation of e-procurement in PT. PLN gave significant impacts on the total cost of acquisitions, organizational characteristics, governance structure, pre-sourcing business processes, and procurement quotation. Five impacts were identified in this study, namely: change in total cost of acquisitions, changes in organizational characteristics, changes in governance structure, management system specification and implementation. Manual and face-to-face processes were still conducted in e-procurement process in PT. PLN, so the procedure of course remained the same before and after the implementation of e-procurement system. III. PROPOSED SYSTEM AND FEATURES P2P application is used to provide solution for manual procurement process in the college along with the vendor details. It contains the details of all approved vendors of the college and place for new vendors to submit their quotations. The key feature of P2P is the opportunity provided for new vendors to submit a registration request by submitting their license document and other details. 2

Also the vendors can view their service rating through the feedbacks and ratings for each PO and average rating. The P2P automation system starts from the staff/department item request to the item delivery. This is a web application using Spring and Hibernate frameworks. The items are approved for department if it is there in stock; else it is added for quotation submission list. The store manager of the institute is in-charge of the entire procurement process. He sends quotation request to vendors and the vendors submit their quotations. The CEO or Secretary submits the PO to a selected vendor. The vendors accept the PO and update the status of PO. Finally the items are delivered and the purchase is completed with feedback and invoice submission by store manager and vendor respectively. The P2P provides the following features: A. Collaboration Department can submit their order request to P2P which is forwarded to Administrative Officer for approval. Next it is sent to store manager for approval based on item in-stock quantity and requested quantity. Similarly the quotation request is sent to vendor and followed by quotation submission by vendor to PO submission. Hence is a collaborative flow of work in P2P system. B. Communication It improves and increases communication indirectly with department staff, AO, store manager, CEO, secretary and vendors through order request, quotation request and PO submission. This communication is through mail and status update for each order. C. Vendor Request New vendors can register their request by filling in the registration form and uploading the license document. The vendors are approved by store manager after the verification process. D. Order Status Department staffs are provided with up-to-date information of their orders. The store manager and other higher officials are provided with the status of PO. IV. SYSTEM DESIGN The P2P system is designed based on four main modules, Authentication HR Master Vendor Accounts A. Authentication The authentication module contains the login link for staffs and vendors. It also contains the registration link for new vendors to enter their details and submit the license document. The staff login is made using staff user id and vendor login is using their registered email id. It also contains link for forgot password for both users through which their password is mailed to their email id. B. HR Master The HR Master module is the key module of P2P system as it contains the main process of this system. It contains three sub modules, 1) Department requisition: The departments in the college can submit their order request in the P2P system. They select the product by checking the items and choosing quantity from the list. Finally they submit the request of order to the purchasing department. 2) Sales department: The process of submitting the quotation request is done in this sub module. The quotation request is submitted for selected products along with the entered quotation deadline period to vendors. 3) Purchasing: The selection of quotation for PO is done in this sub module. The quotations of different vendors are analyzed and one among them is chosen and purchase order for it is submitted. The submission details include the vendor, quantity, product, order amount and delivery date. C. Vendor The vendor module contains all the process of approved vendors. It contains link to view quotation request and submit quotation. It also contains page to view PO requests and update its status. It then contains the link to submit invoice to the institution by filling in the details. E. Feedback and Rating After completion of PO the store manager is redirected to feedback page to submit his opinion on vendor service along with rating for 5. The ratings are averaged to get the vendor overall rating. These feedbacks and rating are viewed by vendors to improve his level of service. D. Accounts The order is delivered to the college from the vendor and the vendor submits the invoice to the college. These invoices are stored by the accounts and finance department to record the purchasing details. The payment to the vendor is done through this department. 3

Fig. 1 : Process Flow V. SYSTEM PROCESS A. Authentication The authentication module is the starting point of P2P process. As mentioned before it contains the login and register page for staff and vendor. The authentication details of the logger are verified and if true they are redirected to their respective welcome pages. B. HR Master The HR Master module contains the main process of P2P system. The processes of its three sub modules are, 1) Department requisition: The departments head send the order request to AO by selecting the items, entering their quantity and submitting the order. They are then redirected to their orders page to verify their order. The AO receives the order request 4

and approves it if it is genuine else he either changes the quantity or cancels the order. 2) Sales department: After the approval by AO the order request is passed to store manager where he checks the available quantity of item and approves the order or adds to purchase list. The items in purchase list are then submitted as quotation with a quotation period. 3) Purchasing: The quotations are received from the vendors and the CEO or Secretary selects the vendor quotation and submits the PO by changing certain details like unit price, quantity, etc,. They can also check the PO status in this sub module. The store manager can either complete the PO or send exchange request for a certain quantity after the items are delivered. C. Vendor The vendors use this module to view the quotation requests and submit the quotation by entering the unit price and delivery period. They can also view the PO s submitted to them and update the status of the PO after each action is made. They also receive exchange requests and update the status of the exchanges. After PO completion the vendor has link to submit their invoice and mail the invoice to the institution. D. Accounts The accounts and finance department is responsible for this module. The invoices are forwarded to them and the payment is made to the vendor. VI. ADDITIONAL FEATURES The main features of this system have been explained earlier and it includes some of the additional features like, A. My Profile Both staffs and vendors can view and update their profile using this feature. They can also change their password for security reasons. In addition the staffs can update only their email id whereas vendors can update their first name, last name, alternate email id, contact, mobile and address. B. My Orders Every user of the institution other than CEO and secretary can view their order and its status. They can also cancel their order using this feature. C. Feedback The institution users other than head of departments can submit and view the feedbacks of each PO and the overall rating of each vendor. The vendors can view their feedbacks and overall rating using this feature. D. Order Management The order management feature is available only for the store manager to view all the orders, their status and can cancel the orders if necessary. E. Item Master Item Master module is also only for store manager and is used to add or delete item from item master list. He can also change visibility of each item to staff members as either true or false. F. Staff The staff module is visible only to the store manager and is used to add new staff by entering related data or delete existing staff. G. Vendor Similar to staff module the vendor module is used to view requested vendors and approved vendors. The store manager can remove vendors if necessary. VII. FUTURE ENHANCEMENTS The P2P system does not automate the ERP process and it is done manually by the store manager and other officials. Hence the future enhancement of P2P application is to integrate the process of procurement and ERP in a single application to manage the college budget during the purchase. By integrating these processes we can improve the efficiency of the system and save time by completing two tasks in a single automated process. CONCLUSION The P2P system is one of the developing technologies in recent years, which is used from request to invoice automation. P2P process has reduced the workload of manual process in college by providing online forms to perform purchases. It has also provided a platform for new vendor to approach the college online through registration process. REFERENCES [1] Mark Beveridge, (2009), Oracle iprocurement, Mark Beveridge, Senior Consultant for Rocela Professional Services. [2] Peter Trkman and Kevin McCormack, (May 2010), Estimating the Benefits and Risks of Implementing E- Procurement, IEEE Transactions On Engineering Management, Vol. 57, No. 2. [3] ERP / eprocurement Systems Work Group, (2013), ERP and eprocurement Systems, Engineering Issues Committee. [4] Vijaykumar R. Salkute and Zonal Manager, (2013), Exploratory Study Of E-Procurement Adoption In Indian And Chinese Companies : Case Study With Innovation Approach, ISSN: 1945-5488, pp. 107-115. [5] Procureedge, (2014), Reverse e-auctions: A Recipe for success. [6] Procureedge, (2014), Googlization and amazonization of procurement: Essentialbuilding blocks for increasing user and spend adoption. [7] Achmad Nizar Hidayanto, Yuanisa Ditari, Dina Chahyati, Study of e-procurement Implementation Impacts: A Case Study in PT. PLN. 5