Modern technology is improving at a rapid pace every day, but it can sometimes be confusing for some people. As a result, people put off learning and adapting to it. This happens to organizations just as often.
One such example is e-procurement systems. These systems offer huge advantages; yet due to the lack of knowledge, organizations either don't know how to use them or even know about them.
There are many benefits to e-procurement that this article will go into, but before we go into it, let's briefly go over what e-procurement is.
What is E-Procurement?
E-procurement (sometimes also known as supplier exchange) is the B2B (business to business), B2C (business to customer), or B2G (business to government) purchase and sale of supplies, services and work through the means of internet.
E-procurement simply refers to purchases that are completed via a digital platform or network.
Benefits of E-Procurement Systems
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A Faster Procurement Process
One of the greatest benefits of an e-procurement system is that it allows you to perform any procurement action anywhere in an instant; it can be done via phone or tablet. Further, the response time is enhanced through the usage of mobile or other technological means.
A huge drawback to the old methods of procurement is that the process is time-consuming and repetitive.
An automated procurement process removes some of the repetitive tasks and makes it easier for procurement managers to do their work; it frees up time and increases productivity.
E-procurement systems are subscription-based and are priced reasonably. Being able to manage a company’s prime procuring tools without breaking the bank is definitely a plus.
Increases the Supplier Efficiency
E-procurement systems help move companies a step forward and help manage suppliers who are lagging orders.
E-procurement systems allow evaluation and the keeping of a scorecard of suppliers. It allows for checking the speed, quality and other custom factors about the suppliers in contact with.
So, if a supplier company is lagging behind, e-procurement systems will recognize the trend and notify accordingly.
Ease of Implementation
ERP systems take months to be set up properly and often it is also time-consuming for employees to relearn the system. Procurement systems, on the other hand, are fast and easy to implement.
Each company has a different method of procurement, and e-procurement systems allow for customization, selection of different modules to achieve the desired method of procurement.
Aspects such as purchase-to-pay, strategic sourcing, and contract management are accessible through e-procurement and they can be configured to create a proper workflow required for a company.
Collect Data and Create Reports Faster
E-procurement systems allow for record keeping of the details of the amount spent for a company.
The reports and data which could take hours to compile can be rapidly accessed and shared according to the need of the company.
Shift Suppliers With Ease
E-procurement systems allow a company to switch among multiple suppliers to satisfy the company’s needs. Not only that, e-procurement makes for easier data saving and records in a spreadsheet.
The user-friendly tool allows for transaction keeping and data purchasing in a worksheet. The saved data files can be easily and safely exported.
Visible Transactions and Purchasing data
A great benefit for a procurement department is the visibility of transactions and data. An E-procurement system allows for keeping track of every transaction that has been made.
This makes it easier to control a budget and save on tail-end spends.
Customization and Scalability
E-procurement systems can be customized to suit the needs of both buyers and vendors. These systems even grow with the organization.
Managing Tail-end Spend and Maverick Spend
E-procurement systems allow for keeping records on each transaction, including maverick transactions or spending.
However, it does not mean it reduces the cost of the items purchased, rather helps control for items that are purchased and whether those items are necessary or not.
Improves Supplier Compliance
Technological advancement has allowed businesses to shift to a more modern system. Records show that companies receive 34% of invoices through online channels and that 70% of purchase orders are done online too.
It is only a matter of time when suppliers will adopt digital methods to supply their products in order to keep up with the pace of the demand.
An E-procurement system allows companies to handle their purchase and procurement through online mediums. Digitization is almost imminent if a company wants to have a better compliance rate.
Reducing Cost and Increase Efficiency
Efficient sourcing saves extra cash and thus, reduce costs. E-procurement system has a number of features that allow for more efficient and better sourcing. Some of the features include:
- Important documents can be stored and shared with suppliers
- Better values can be secured through recognized contracts
- Allows you to access to an official list of vendors
- Expert opinions can be gained through technical evaluation
- Features such as RFQ rally with multiple points of contact
Easy of Sharing Procurement Data
Since the e-procurement system allows for keeping and sharing spreadsheets on a digital level it becomes much easier for employees to complete their work, as employees do not have to go through hours of searching just to find and share required files.
The e-procurement system reduces the employees’ workload while saving them time.
Increase Productivity & Decrease Time Consumption
The e-procurement system reduces time consumption which also increases the productivity of employees due to:
- Details about suppliers being stored in one place.
- Auto-fill features and reliable information can be used for delivery receiving and 3-way match invoicing.
- Add-ons, requirements, and specifics can be maintained through all documents.
- Saving and recalling of large orders and complex bills of quantities can be done easily.
Tracking Minor Spending
The cost of raising a purchase order can be as high as $120. However, an e-procurement system can reduce the cost to as low as $2.
An e-procurement system allows for keeping track of minor expenses with associated GL (general ledger) accounts.
Keeping track of expenses helps preserve the cost of raising an excessively comprehensive purchase order.
Integration with Other Platforms
E-procurement systems can easily integrate with other software platforms, namely accounting platforms.Generally, companies make decisions among e-procurement systems that come with different integrations which offer different values based on the needs of the company.
Reminders for Deadlines and Due Dates
E-procurement systems manage various due dates related to the procurement process. They help to keep records of due dates and also give reminders according to the deadline of the procurement process.
The timeframes of the procurement process are also organized and are shared accordingly.
Strong Procurement Infrastructure
When a company grows it develops multiple branches. Maintaining these branches often become troublesome when there is no proper structure planned.
E-procurement systems include design and structures for the complicated procurement process. They also provide insight into proper planning and designing structures for companies to maintain all the purchase and help in managing the departments.
Confusion Eliminated; Teamwork and Control Improved
Teamwork and collaboration can be improved through the e-procurement system. It centralizes all of the communication in the procurement process.
Confusion about the purchasing process and other managemental issues can also be solved. Audit reports of sourcing are also easy to share with stakeholders
E-Procurement systems allow for control over the purchasing process and eliminate confusion.
Tools to Help with SOP
An e-procurement system allows for setting up and maintaining nearly every SOP (standard operating procedure). The procedures are listed below:
- A 3-way match confirmation is used on every purchase
- Ensures orders placed from legit contracts
- Based on item quality, timing and efficiency the supplier performance can be evaluated
- Constructing procurement application forms before the actual process
- Creating automated approval systems before orders are sent
E-procurement systems come with a variety of benefits that can improve the performance and efficiency of company procurement strategies.
E-procurement may not be the final solution to procurement problems, but through its online and digital reach, it can be said to be the logical next step.