Purchasing is vital to a business’s success. Strategic sourcing and efficient purchasing operations, as part of the broader procurement process, help reduce costs and boost profits. As companies grow, purchasing naturally becomes more complex—a sign of thriving business paired with an increased need for goods and services. However, if this complexity isn’t managed, it can lead to employee frustration, compliance issues, inefficient workflows, discrepancies, and overspending.
The global pandemic underscored the urgency for businesses to modernize purchasing. To stay competitive, companies must adopt robust, formalized processes to prevent profit losses from mismanaged spending. A modern purchasing system simplifies requisitions for buyers while giving key approvers the control, visibility, and involvement needed to align purchases with growth goals.
What Modern Purchasing Looks Like
Steps of a Modern Purchasing Process
Regardless of industry or company size, purchasing follows a standard workflow:
- Recognizing a Need – Identifying what the business requires.
- Researching Suppliers – Comparing prices and options from potential vendors.
- Submitting a Purchase Request – Formalizing the need for approval.
- Sending a Purchase Order – Issuing the order to the supplier.
- Receiving Goods or Services – Confirming delivery.
- Issuing Payment – Completing the transaction.
Modernizing this process aims to streamline tasks for buyers and enhance oversight for approvers. It fosters accountability, ensures compliance, and involves procurement and finance teams early—saving costs, simplifying purchase orders, reducing manual work, and improving communication.
Traditional vs. Modern Purchasing
Traditional Purchasing relies on fragmented tools like email, Slack, and spreadsheets, leading to inefficient collaboration, poor tracking, and limited information access. Stakeholders struggle to make informed decisions, such as approving purchases.
Modern Purchasing leverages automation and centralized systems for collaboration and transparency. With accessible data, stakeholders can make smart, budget-friendly decisions to meet procurement needs efficiently.
Key Stakeholders in Purchasing
- Requesters: Employees (e.g., developers, marketers, HR) who initiate purchase requests (RFPs or RFQs).
- Managerial Approvers: Managers or budget owners who approve based on business needs and budgets.
- Professional Approvers: Teams like procurement (vendor selection), legal (contracts), security, IT, or finance (budget accuracy) who ensure compliance and expertise.
- Finance: Matches invoices to purchase orders for auditing and record-keeping.
- Vendors: Suppliers fulfilling orders, valuing efficient processes and timely payments.
Why Automation Matters
Automation is the backbone of modern purchasing. With multiple steps, stakeholders, and significant data and funds involved, manual management is impractical. As businesses scale, automation ensures spend control and meets rising demands. Benefits include:
- Eliminating emails and spreadsheets.
- Breaking down data silos for better collaboration.
- Speeding up approvals and purchasing cycles.
- Reducing human errors.
- Enhancing stakeholder experience.
Note: The first step—recognizing a need—is hard to automate, as it relies on human judgment. Strategic integration of automation elsewhere in the process is key.
Best Practices for Modern Purchasing
To control spending and optimize purchasing, adopt these ten practices:
- Focus on High-Value Purchases – Prioritize big-ticket items (e.g., IT, software) for early involvement and cost savings.
- Give Requesters Visibility – Provide real-time updates to reduce frustration and delays.
- Equip Approvers with Budget Access – Enable real-time budget insights for informed decisions.
- Involve Legal and Security Early – Ensure compliance and value before purchases.
- Use a Centralized System – Replace scattered tools with one platform for all purchasing data.
- Maintain a Vendor Database – Help requesters use existing suppliers to save time.
- Manage POs in an ERP – Integrate purchase orders with automated systems.
- Strengthen Vendor Relationships – Improve visibility and processing times for suppliers.
- Seek More Automation – Identify and streamline remaining manual tasks.
- Support Remote Work – Ensure tools are accessible for remote stakeholders.
Conclusion
Purchasing is no longer a centralized task—it’s a company-wide responsibility involving more stakeholders than ever. Outdated, siloed processes (paper, email, spreadsheets) can’t keep up. Modern tools and workflows are essential to manage evolving needs and spending effectively.
A modern purchasing process delivers resources at the best price, under favorable terms, within budget, and without misconduct—fast. For growth-focused companies, this is non-negotiable.
FAQs
What are the steps in the purchasing process?
- Recognizing a need
- Researching suppliers and comparing prices
- Submitting a purchase request
- Sending a purchase order
- Receiving goods or services
- Issuing payment
How effective is the purchasing process?
It’s highly effective when transparent, enabling stakeholders to avoid bottlenecks, track spending, and maintain audit-ready records.
Why is a formal purchasing process important?
It speeds up purchasing, ensures transparency, and helps manage operational spend—crucial for scaling businesses.
