Traditional procurement processes can be characterised by manual and resource-intensive activities. Even where some automation is in place, there can be unacceptable levels of manual process and activity around the automation. Many companies still use very traditional procurement methods, despite knowing that there are many associated issues. This article explores some of the issues associated with traditional procurement processes and the alternative use of automation that is fully integrated into the systems of the business.
The Traditional Approach
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 can take an average of six minutes per call for basic interactions.
Furthermore, this traditional procurement process is timeconsuming 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 need 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.
A key component to overcome these challenges is automation integrated into your business systems, using an eProcurement solution. Linking buyers and sellers into one single platform. Plus, importantly, providing a mechanism for users to make purchases, without involving Procurement in the day to day transactional activity. Using a cloud-based eProcurement solution enables access anywhere and at any time. Ensuring that significant efficiency gains can be realised across an organisation.
The first of these gains is time savings. An eProcurement platform removes any repetitive lengthy operations associated with approval, contracting, negotiation, and discussion and replaces them with more automated processes and use of standard forms.
An eProcurement platform improves visibility. Bringing all users, procurement professionals and suppliers onto one platform. Suppliers, delivery and financial information is then stored in one consolidated system. Additionally integration to your key systems, such as payment systems and warehousing software, is achieved. This gives users easier access to holistic information relating to any purchase information that can then be presented graphically in the form of Dashboards. Resulting in a streamlined procurement, sourcing and invoicing solution in a cloud based platform, with visibility and control over every transaction locally, nationally and globally.