Procurement is about obtaining goods and services and the procurement processes and operations linked to this. Many companies still use very traditional procurement process methods despite the many issues that are associated with them.
A traditional procurement process is characterised by manual events , including many small, repetitive tasks. These tasks could be anything from approvals, writing RFxs contracts, negotiations and discussions of bids. Typical phone calls between a buyer and a seller are time consuming and can take an average of six minutes per call for basic interactions.
Furthermore, this traditional procurement process is time consuming and expensive in resource terms. Managing the approvals, invoices and bills on paper is both wasteful and costly and of course prone to errors and loss of paperwork. Plus, there needs to be sufficient people to manage the processes, with business expansion resulting in a direct correlation to increased headcount. Samuel Greengard the author of “The Route to Better Procurement” states that “traditional procurement could be costly due to the presence of many ledgers associated with many suppliers.”
Understandably, procurement is a difficult process to control. This is underlined by the fact that traditional procurement involves many groups with different users and departments responsible for each element of the overall process. This makes visibility more blurred, leading to a bigger loss of control and is usually increased by miscommunication between buyer companies and the many suppliers involved. Spend control becomes flawed, which could potentially mean further financial burdens.
Companies can overcome these challenges with an eProcurement platform. These are cloud based management platforms that link buyers and sellers into one single platform. A cloud based spend management platform is an efficient procurement system that leads to significant management gains.
The first of these gains is time savings. An e-procurement platform would scrap any repetitive lengthy operations associated with approval, contracting, negotiation, and discussion and replace them with more automated processes and use of standard forms.
Jaikumar Vijayan author of “E-Procure System Talks Back in Real Time” states that “e-procurement systems are efficient platforms that lead to substantial economic gains.” Samuel Greengard states that “for invoicing alone up to $14 per invoice could be saved by automating invoices.”
An e-procurement platform improves visibility if it consolidates all users, procurement professionals and suppliers into one platform. Suppliers, delivery and financial information is stored in one consolidated system, with integration to key systems such as payment systems and warehousing software. This gives users easier access to holistic information relating to any purchase. Information that can be presented graphically in the form of Dashboards. Having a streamlined procurement, sourcing and invoicing in a cloud based platform leads to visibility and control over every transaction locally, nationally and globally.
Read about eProcurement adoption