An e-procurement system can boost a company’s procurement efficiency and help in achieving long term cost reductions. Plus, it can make controls on spending easier to implement.
This blog first appeared on the Corcentric website.
Many organizations have begun to realize that paper can sometimes clog the system. The desire to move toward e-procurement appears to be in the agenda for most procurement professionals and organizations. In fact, according to The Hackett Group, the average organization only manages about nine percent of spend through e-procurement tools, while world-class companies are at 34 percent.
CFOs, CIOs, CPOs and other executive management have come to realize that e-procurement offers much more than simply shortening the supply chain when it comes to costs. Here are the top four benefits associated with migrating to e-procurement – greater demand and real time visibility and transparency, clarity on spending, reduced rush orders, and increased accessibility and flexibility.
1. Greater Demand and Real Time Visibility and Transparency
E-procurement allows organizations to keep track of their infrastructure, applications, data and users at all times. Having constant visibility into procurement provides professionals with increased security and reduced risk throughout the supply chain. By using e-procurement and storing information on the cloud, all files are stored centrally and everyone sees one version of all transactions. This can enable decision makers to make better negotiations to reduce additional spending while improving supplier and organizational performance.
2. Clarity on spending
Transactions can be centrally tracked when there is an e-procurement system in place. E-procurement can be used to increase productivity, provide visibility into day-to-day transactions and make it easier for users to obtain needed supplies. This enables easy and full reporting of items purchased, purchase orders, and completed payments. Once an organization has a better understanding of where its money is going, decision makers can then optimize spending to meet organizational goals.
3. Reduced Rush Orders
Using e-procurement tools allows procurement professionals to spend time on more strategically significant functions and valuable tasks than manual data entry. E-procurement automates a large chunk of the procurement process, reducing the time and money spent on the purchasing cycle as a whole and it eliminates the risk of human errors. For example, with automated matching of invoices, goods can be ordered, processed and paid for in a matter of minutes. Some e-procurement systems can automatically update suppliers when stock levels are low, and they can proactively send customers more supplies, reducing the likelihood of ‘super urgent’ rush orders. In addition, e-procurement reduces disputes substantially since information is much more accurate. Harnessing the power of automation creates a smoother work flow.
4. Increased Accessibility and Flexibility
Procurement information can now be accessed across different locations and devices. Storing information in the cloud is ideal for organizations with growing or fluctuating demands. If procurement’s needs increase or decrease, it is easy to scale operations and volume up or down through the e-procurement system. This level of agility can give procurement professionals a real advantage over competitors. E-procurement provides flexibility in implementing changes and new technologies without high risk and cost. Organizations have room to experiment and go back to their original system if they are not satisfied.
Using e-procurement does more than just shorten the supply chain. Moving to an e-procurement system is an investment that can boost a company’s procurement efficiency and help in achieving long term cost reductions; and make controls on spending easier to implement. Procurement isn’t a backroom function to let languish with outdated tools and capabilities. Instead, it’s potentially the largest opportunity to add value at companies across the board.