These days most businesses are conducted online and e-Procurement generally refers to contracting electronically where the entire commercial transaction will be automated. All the commercial transactions, e.g. the product purchase or services between various trading partners where there will be placing orders, invoicing, reception, provision, etc. will be online.
This concept of e-Procurement is applied to various trade relationships within the private businesses or between any private companies and other public sectors too. However, when we say e-procurement then it will mean that it will refer to certain electronic communication for all transactional processes.
Because of increased volatility, these days most procurement teams have to struggle to keep up with the market and be able to sustain the present competition. Most of them, however, are still following the older, legacy called ERP systems that are holding them back.
Whether it is a legacy ERP system with a built-in purchase module or a separate, fragmented procurement tool, its rigidity makes it hard to start a complete digital procurement transformation.
An e-procurement software will be more flexible and may help procurement managers to meet all the requirements of the policy and help them grow. If you also still rely on the old system of procurement and sceptical about e-procurement system, then let us update you with a few e procurement advantages in this article.
What is e-Procurement?
This is a certain B2B (Business-to-Business) mechanism by which the entire business transactions like the acquisition and product sales and services will be carried out through the Internet. Here the word ‘e’ stands for electronic.
The following are the few e procurement advantages that you must be aware of if you are still continuing with your old system of procurement.
- Mitigate all your procurement risks
During the latest outbreak of Covid-19, most businesses were totally exposed and they had almost no way to manage their business as they were following the same old ways of procurement. Most of them have been wiped out of business now.
Automated procure-to-pay software can reduce all these risks, overall cost, and processing time. This can free up the team who are responsible for procurement to focus much more on their human-centric tasks.
Whatever may be the size of your company, it can enable you to buy smartly, streamline the purchase-to-pay cycle, and also mitigate your supply chain risks.
- Break down all data confusion
Any procurement process may have many stakeholders like:
- Vendors
- Indenters
- Finance team
- Inventory management
- Procurement manager
There can always be confusion about the actual data among various shareholders as a result, often wrong supply or payment issue crops up. However, when every communication, transaction, and critical collaboration will happen through e-procurement then all these confusions will vanish away.
- Bring all underperforming suppliers inline
The majority of the time, purchasers do not have enough time to manually track supplier performance. Failure to recognize bad supplier performance can have a detrimental impact on the firm.
Procurement professionals can finally ditch spreadsheets and paper with an automated link to a business that gathers, saves, and displays up-to-date, reliable information about suppliers, the items they sell, and their performance.
Businesses may use richer supplier data to gain deeper insights, detect buying risks, uncover opportunities, and effectively negotiate deals.
- Avoid any invoice delays and also duplicate payments
In the procure-to-pay process, matching an invoice to the accompanying papers is a difficult task. The price and conditions on an invoice must be the same as those on the purchase agreement and the receipt notes for the items.
Furthermore, the invoice’s line-item quantity, spec sheets, and per-unit price must match the purchase agreement and the physical goods received. Automation can considerably offer e procurement advantages like cost reduction, accuracy, and time needed for validations.
- Eliminate any dark purchasing
If the procurement activities are carried out manually or following any old procedures that there are lots of chances of dark purchasing, where stakeholders may not have any idea who has requested and why. Many payments may happen outside of regular practices.
A transparent system where you can identify and also eliminate unauthorized spending and purchases will see an almost 60% reduction in dark purchases.
- Can empower the suppliers with self-service
One of the main e procurement advantages can be reducing a lot of follow-ups with vendors. In an automated procurement system, you can experience by using a suitable vendor portal, how much it is going to make their lives easier by offering them much more visibility about the payment status while offering buyers much greater control over their communication.
Vendor portals can help empower the suppliers with the following:
- Track purchase orders
- Manage product specification
- Raise invoices
- Update shipping data
- Manage payments in a single place.
Buyers can now use this opportunity and extract discounts for early payment.
- Remove approval bottlenecks
Any purchasing system that relies too much on manual interaction, spreadsheets, and emailing is vulnerable to human mistakes and the dangers that come with it. People tend to act their own way in a people-based organization, even if it would mean circumventing laws to shorten purchasing cycles.
With enforced transparency and role-based accessibility, an efficient e-procurement platform will mitigate such buying risks, preserving sensitive data and restricting sensitive information to key stakeholders while maintaining the procurement cycle going forward.
- Strategize with insight rather than instinct
Traditional ways of emailing, using spreadsheets, and various chat threads often the data may not be completely visible during the procurement process.
Managers, as a result, responsible for procurement and also other decision-makers may not get exact status, stock levels, confirmations, and many other things that may be needed to make the right purchase decision.
These e-procurement tools will help in collecting and organizing data about purchases of the past, vendor performance, and a few ready-to-use graphic reports. These reports help companies automate and handle their purchasing, contracts, and vendors more effectively.
Today, most businesses are dealing with several Chinese as well as local suppliers to procure either their raw materials or any finished products, where it may become quite difficult to keep a proper track of all your orders and payment status. Your business can surely exploit the e procurement advantages to increase the bottom-line.
