Today, many procurement teams are struggling desperately to keep up with the ever-increasing market volatility and demand to out-maneuver their competitors. This is largely because more of them are stuck with old systems and processes that are no longer viable when there are smarter alternatives out there. Which brings us to the subject of this article: E-Procurement. What is it and why should you use it? Read on and let’s find out.
What is E-Procurement?
E-procurement is essentially a business-to-business (B2B) mechanism of procurement which carries out business transactions (i.e., acquisition and product sales), over the internet. The ‘E’ of course, standard for electronic.
It’s designed to centralize interactions between an organization, customers, and with other partners in their supply chain who can improve speed efficiency practices, by streamlining operations and thus boosting productivity.
This is a relatively new and innovative method of procurement that comes with a host of amazing benefits for your business. In fact, eProcurement has been around since the 1980s when EDI (Electronic Data Exchange) was developed. It allowed files and documents to be shared between people in business, which at one point seemed revolutionary because it cut down on physical shipping of these sheets completely.
E-Procurement has since come to represent everything from selecting suppliers and purchasing goods, all the way down to how you place bids.
What is the difference between E-Procurement and traditional procurement?
First, what is the difference between e-procurement and traditional procurement? Is there really that big of a difference?
Procurement refers to the process of purchasing, however you can read how they differ here. E-procurement on the other hand, refers to the process of making purchases online. In the typical process of procurement, such functions are managed manually, largely depending on paper work, Excel sheets, phone calls, face-to-face conversations, and other traditional means of recording and exchanging information.
As you can imagine, using such a dated approach to procurement makes it rather difficult to procurement teams to track and manage the spend behaviour and patterns of a business. E-procurement on the other hand leverages innovative software providing companies with a more comprehensive and thorough view of their transactions, including a far stronger grasp of the life-cycle of their supplier contracts, better data for effective supplier relationship management and so on.
In this digital age, embracing new innovation – particularly when it allows you to automate and improve the more time-consuming tasks – is fast becoming an essentiality for businesses who wish to remain in the game.
What are the benefits of E-Procurement for your business?
Let’s look at the way in which switching to e-procurement can greatly benefit your business and reduce costs:
1. Increase visibility
E-procurement will provide you with greater centralized access to your data. You can track down PO’s or invoices and analyze the appropriate metdata in order to find certain areas in which your processes can be improved, for example:
- Areas in which approvals tend to take longest (and look to shorten them).
- Vendors who you tend to spend a large amount of money with (and may be able to negotiate better deals).
- The time it takes to pay invoices and how you may be able to take advantage of things like ‘early pay’ discounts, thus optimizing your cash flow.
- On-contract Vs. off-contract spending.
- And so much more!
If you want greater visibility and access to a host of actionable data, then e-procurement is for you.
2. Greater control
Systems with e-procurement in place enable a far greater level of control and flexibility over every aspect of the purchasing process.
Control is essential to the modern e-procurement system. From choosing who can input an order, who will be able to approve and purchase it, and finally who can then receive against or pay it can bring a host of advantages to the way you operate.
Additionally, you can even manage which of your team can see the details of each transaction, which kind of details, and so on. As such, if you want greater control over what your business spends, who can spend it, authorize it, and see it, then embracing a new and innovating digital e-procurement system is the way forward.
3. Leverage the power of automation
One of the most common problems with traditional procurement is human error. It is just one of those things that cannot be avoided. With so much data being inputted into your systems, eventually someone is going to put something in wrong or fail to save their changes properly.
Modern e-procurement however, uses the power of automation to mitigate all of those challenges and render them a thing of the past. So, rather than having employees enter invoices by hand, you can instead implement things like:
- Automated invoice generation
- Internal and PunchOut catalogs
With employees no longer wasting time focusing on the more time-consuming tasks that are subject to human error, they can instead put their efforts into other important aspects of your business.
4. Improved budgeting
Modern e-procurement systems can enable businesses to automate their budgeting processes and have greater visibility over the money moving in and out of your organization. These clever systems can allow users to better understand available budget and the impact that such a spend will make before it is even authorized.
5. Easier vendor management
Being able to view all of your orders and vendors in one place is a great way to help you strategize cost-savings:
- Consolidate orders and take advantage of bulk discounts
- Show vendors how much you spend to negotiate better rates
- See if and when non-preferred vendors are being used
This is the kind of data that simply doesn’t become available to you via traditional procurement systems.
6. Significantly reduce rouge spending
It’s not uncommon for employees to go rouge and make purchases without the proper approvals – particularly when under a lot of pressure. With e-procurement systems in place, this is something that is impossible to hide and thus will be significantly reduced. That, and with such a smart and useful system in place providing greater vendor visibility, rouge spending would rarely be required.
7. A solid audit trail
When you have so much airtight data stored on your systems and a detailed history of all exchanges for everyone to see, audits will become an absolute breeze.
8. Attractive money saving
Not only does switching to e-procurement save you a lot of time and manpower, but it can save your business a great deal of money each year.
If you haven’t switch it up and embraced e-procurement, it’s time that you start giving it some serious thought. The future is here!
Navigating the landscape of procurement can seem like a daunting task, with so many moving parts and complex systems to keep track of. That’s why it pays to trust the experts at UCT (Asia) to help. Our team of procurement specialists has years of experience navigating this tricky terrain, enabling us to offer customized solutions that will precisely meet your organization’s needs. Whether you’re looking for support with public sector contracts, supply chain management, or effective sourcing strategies, our experienced professionals are here to guide you every step of the way.