E-procurement advantages are
becoming more evident as the wider understanding of its many uses become
apparent. The main reason companies have embraced e-procurement is to increase
productivity, provide visibility into day-to-day transactions and make it easier
for users to get the supplies that they need.
It has not been an easy road for
e-procurement as implementation has its challenges and it has taken time for
business managers and procurement departments to fully accept it. The
advantages of e-procurement are slowly being understood:
Reducing costs
Costs can be reduced by
leveraging volume, having structured supplier relationships and by using system
improvements to reduce external spend while improving quality and supplier
performance. E-procurement eliminates paperwork, rework and errors.
Visibility of spend
Centralized tracking of
transactions enables full reporting on requisitions, items purchased, orders
processes and payments made. E-procurement advantages extend to ensuring
compliance with existing and established contracts.
Productivity
Internal customers can obtain the
items they want from a catalogue of approved items through an on-line
requisition and ordering system. Procurement staff can be released from
processing orders and handling low value transactions to concentrate on
strategic sourcing and improving supplier relationships.
Controls
Standardized approval processes
and formal workflows ensure that the correct level of authorization is applied
to each transaction and that spend is directed to draw off existing contracts.
Compliance to policy is improved as users can quickly locate products and
services from preferred suppliers and are unable to create maverick purchases.
Using technology
E-procurement advantages can only
be fully realized when the systems and processes to manage it are in place.
Software tools are needed to create the standard procurement documentation:
electronic requests for information (e-RFI), requests for proposal (e-RFP) and
requests for quotation (e-RFQ). These are proven methods to source goods and
make the framework agreements that offer the best prices.
An adequate, fully integrated
e-procurement approach is needed for overall success. Additional programs
provide the framework for the supplier databases and spend management as well
as holding key vendor information and being an electronic repository for
contracts. All these facilities cost money and a clear business case must be
made for e-procurement. In most cases this is fairly clear that cost savings
are possible.
It pays for companies to spend
money on e-procurement technology, this investment will boost efficiency. The
longer term reduction in costs will enable companies to direct their resources
to more strategic initiatives. E-procurement advantages are significant
bottom-line benefits, including cost reduction, process efficiencies, spending
controls and compliance.
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