Today, digitization is scaling business operations at an increasing rate, and procurement is not exempt from this trend. By automating procurement and supply chain processes through the use of internet-based applications and technology, businesses can achieve better results.
For instance, employing eProcurement systems enables businesses to sell online more efficiently. Suppose your company can respond rapidly to your customers’ e-procurement initiatives. In that case, you will be well-positioned to meet all their policy requirements and become their preferred supplier, growing revenues in your accounts.
However, the benefits of e-procurement solutions are multifaceted for your business. Let’s explore them.
Decreased Costs
One of the most appealing aspects of e-procurement is cost savings. It saves your business money by preventing duplicate spending, leveraging volume purchasing, and saving costs associated with paper-based systems. Such savings will go directly to the company’s bottom line.
Mitigated Procurement Risks
Controlling costs and mitigating risks is challenging for every company and procurement department. And the pandemic is one excellent example. Buyers can successfully develop what-if scenario analysis using data provided by e-procurement systems, enabling them to make more efficient and cost-effective purchase decisions.
Information Transparence
E-procurement makes the transference of information more transparent to the company and its supplier. It makes it easier to write and analyze reports on your procurement systems, ensuring that your procurement procedures conform to your company’s policies. Moreover, you can view and analyze purchasing behaviors, leverage buying influence, and identify opportunities to consolidate suppliers with the information at hand.
Better Buying Power
As e-procurement allows businesses to maintain data better, it puts them in a position to manage their relationships with suppliers more efficiently. Consequently, company owners can negotiate better volume discounts and leverage their buying power more effectively with the information at hand. Moreover, e-procurement also allows businesses to more easily crystallize their purchases, resulting in even greater buying power and lower overall costs.
Simplified Data Management
Procurement processes usually involve many stakeholders, which may impact the quality of procurement processes, causing a lack of clarity, long procurement cycles, unnecessary spending, and missed opportunities. However, all data stays in a single interface when all transactions, communication, and collaboration happen in an e-procurement solution.
That means e-procurement enables and facilitates the timely collection of comprehensive and reliable data, ultimately simplifying purchasing data management and streamlining all procurement processes.
Removed Approval Bottlenecks
A procurement system that depends on manual interventions, spreadsheets, and emails is subject to human errors and associated risks. As people tend to do things their way, there can sometimes be situations where employees bypass policies to cut down purchase length.
An effective e-procurement tool can address such purchase risks with enforced accountability and role-based accessibility, protecting sensitive information and restricting confidential information to relevant stakeholders while keeping the procurement cycle moving forward.
Avoided Invoice Delays And Duplicate Payments
Matching an invoice and the related documents is complex but necessary verification in the procure-to-pay lifecycle. For example, the pricing and terms on an invoice should match those mentioned in the purchase order and the receipt of the goods note.
Furthermore, the invoice’s line-item quantities, product descriptions, and per-unit prices must correspond to the purchase order, and the products received. With e-procurement solutions, a manually performed matching can be avoided, cost and time saved, and accuracy significantly increased.
Reduced Errors
With an e-procurement system, everything can be saved and stored electronically. And as electronic paperwork is streamlined, it is easier to check for errors. Along with this, past orders can be more easily referenced, meaning your team can save time and ensure accuracy by comparing orders to secure new ones are correct.
Budgeting
Budgets are an excellent e-procurement system hallmark. However, if done in spreadsheets, the possibilities of errors, low visibility, and no realistic way to enforce approvals for over-budget purchases are ominously present.
All of these processes can be automated with e-procurement and authorized users can be notified of the available budget as well as the potential impact of spending before it is incurred. Furthermore, good software will notify approvers if a request exceeds its budget and will trigger special routing rules or approval workflows for out-of-budget expenses.
Increased Productivity
E-procurement is less time-consuming than traditional procurement solutions. It frees procurement staff from processing orders and handling low-value transactions. With the time saved, they can focus on strategic sourcing and improving relationships with the suppliers. In addition, having documents and forms stored electronically makes it easier to submit reusable bids.
Conclusion
Outdated procurement solutions neither bring business agility nor provide the desired efficiency in a company’s procurement operations. That can make your business struggle to keep up with the increasing market volatility and sustain its competition. For this reason, switching to e-procurement solutions is the best way to upscale your business and improve your internal operations.
Ingrid Maldine is a business writer, editor and management consultant with extensive experience writing and consulting for both start-ups and long established companies. She has ten years management and leadership experience gained at BSkyB in London and Viva Travel Guides in Quito, Ecuador, giving her a depth of insight into innovation in international business. With an MBA from the University of Hull and many years of experience running her own business consultancy, Ingrid’s background allows her to connect with a diverse range of clients, including cutting edge technology and web-based start-ups but also multinationals in need of assistance. Ingrid has played a defining role in shaping organizational strategy for a wide range of different organizations, including for-profit, NGOs and charities. Ingrid has also served on the Board of Directors for the South American Explorers Club in Quito, Ecuador.
