E Procurement is a system which enables an employee, procurement officer or end user/buyer, to make a purchase of remote goods and services indirectly. E Procurement automation encompasses the entire process from the moment a decision is made to make a purchase, through the selection of the goods through a catalog or other process, the approval of the order, the placing of the order, the raising of the purchase order, the receiving of that order into the supplier’s system, through to the invoicing and the delivery/receipt of the goods or services.
Benefits of e Procurement systems:
The benefits of implementing an e Procurement system are multi-faceted and offer benefits at all levels throughout the organisation.
From the management’s viewpoint, E Procurement systems offer improved visibility and control; E Procurement can help finance officers or Procurement officers match up to 80% of purchases with purchase orders, receipts, job tickets or other proof of purchases: the e-Procurement platform helps companies manage liabilities nearer to real-time instead of having to wait to historically match up invoices against purchase orders and goods received. This provides a better view of the supply chain, suppliers, inventories, contracts and pricing as well as offering a better way of managing cash flow and capital expenditure, reducing stock levels and improving purchasing decisions.
E Procurement systems offer employees tasked with making purchases a more efficient way of ordering from preferred suppliers or where there has been a pre-negotiated contract, enabling them to aggregate demand.
E Procurement also offers employees considerable time-saving benefits allowing them to focus on more value added customer facing or ‘front line’ duties. If contracts are in place or lists of preferred suppliers for everything that an employee needs to carry out their job efficiently, then there is a major benefit to the company in terms of saved time – valuable time that can be spent securing a deal with a customer, serving a customer or making contact with new customers, for example.
The Issue: Stick or carrot?
Historically, e Procurement systems were by-passed, employees gave the reason that the systems were cumbersome, unwieldy and slow to respond. They tended to be focused around control at the center, rather than devolvement of responsibility and empowerment to help the end user or buyer execute their role independently.
Now, deep functionality has been over-layed with a consumer type shopping experience on the front end, making it accessible and user friendly to the user who is far more likely to want to stay in the fold and use the pre-approved system.
The trick to getting the adoption of an e Procurement system up to high levels across an organization is to make sure it is quick, uses as few steps as possible to get the requisition made and approved and into the supplier’s system in the form of a Purchase Order. Analytics are key to an audit trail, rather than a physical group of approvers.
Summary – What is e Procurement?
E Procurement projects fail because of lack of adoption. Systems are perceived as too difficult or staff (buyers) worry that automation will put them out of a job. By making a system easy to use, and embedding analytics that show that significant savings have been made (thereby more than justifying the employee’s continuing role in the organization as an ‘income generator’ rather than someone who simply ‘spends money’) technology adoption will be pervasive throughout the organization. Streamlining processes using alerts and exception reporting will help management focus their time on matters that are the big issues rather than simply being seen to wield a potentially disproportionate ‘big stick’ across all buying decisions, how ever large or small.
References & Sources: Forrester: The eProcurement Wave Q2 2014