7 Advantages Of Using Procurement Technology Tools For Your BusinessFebruary 2, 2022
Today, many industries are adopting e-procurement technology to automate supply procurement processes, bringing significant bottom-line benefits to companies by enabling greater productivity, visibility and cost efficiency. At a high level, e-procurement provides opportunities to increase efficiency in business transactions and increase negotiating leverage for companies. The use of e-procurement technology is one of the main metrics used by benchmarking companies to measure the maturity of a procurement organization.
E-procurement process functions include issuing and evaluating tenders, raising and approving purchase orders, selecting and ordering products or services, receiving and matching invoices and orders, and paying invoices, allowing the procurement department to view everything ordered, ensuring nothing can be ordered without approval right, and get the best value by combining multiple orders for the same type of item or even asking a supplier to bid on the business.
Here are the 8 main benefits and functions of the e-procurement process that you may need for your current business:
E-Procurement gives you centralized access to all your data. Track down a PO or an invoice and analyze metadata to find areas where you can improve your processes. This could mean tracking:
- Areas where approvals take the longest and can be shortened
- Vendors you spend a lot of money with (and who you might be able to negotiate better terms with)
- Times to pay invoices to take advantage of early pay discounts and optimize cash flow
- On-contract vs. off-contract spend
- And more!
The sky’s the limit with what you can data mine.
E-Procurement systems allow greater flexibility and control over every aspect of the purchasing process. From controlling who can input an order, to who can approve and purchase it, and finally, who can receive against or pay it—control is central to the modern e-Procurement system. You can even manage who can see the details of a transaction, and which details, after the fact. If you want to control not only what your organization spends but who in your organization can spend it, allow it, and see it, then an advanced digital procurement software system is what you need.
A common problem with legacy procurement systems is human error. A person captures incorrect data in a spreadsheet or fails to save their changes. A person goes on vacation and doesn’t approve a purchase order before they leave.
Modern e-Procurement systems use automation to alleviate these challenges. Instead of having one of your employees enter in a PO or invoice by hand, you can use one of the following options:
- Automated PO generation
- Internal catalogs
- Punch-out catalogs
With these features you can automate data entry and rely on invoice matching capabilities and exception alerts to notify you when your numbers don’t match up, mitigating the risk in AP processes. Need someone to approve a high-priority purchase? Instead of carrying a piece of paper from desk to desk, the system can email each approver in sequence and let them approve right from their inbox to move the purchase along. Your approver is out of office? Let OOO (out of office) delegate approvals automatically send the document to an alternate or the next approver in the chain to keep things flowing and your business moving.
Budgets are a reality for every organization, and a hallmark of a great e-procurement system. With a legacy system, budget calculations are all done by hand or in spreadsheets. There’s low visibility, no real way to enforce approvals for over-budget purchases, and one wrong keystroke can spell certain doom.
Modern e-procurement systems will automate all of this and let authorized users know the available budget and the potential impact of spend before it is incurred. Best-of-breed systems will not only alert approvers if a request is over budget, but trigger special routing rules or approval workflows for over-budget expenses to ensure they’re properly accounted for. An additional benefit of a modern e-procurement system is that they also allow budgeting at both the GL Account and Project level, adding extra flexibility for your budgeting needs.
- Easy vendor management
When you can view all of your orders for a vendor in one place, you can strategize remarkable cost savings. This includes:
- Consolidating similar orders to take advantage of bulk discounts
- Showing vendors how much you spend with them to negotiate discounts
- See when non-preferred vendors are being used (and even put a stop to those orders to save money there, too)
This kind of metadata just isn’t available with a legacy system.
- Reduced rogue spending
Rogue spending is a big issue for many companies. Around 40% of employees admit to having gone rogue—buying an item without proper approvals, or buying a different item than what was approved—at some point. With paper and spreadsheets, it can be easy to hide or mask a rogue purchase. Not so with e-Procurement systems. In fact, having an electronic audit trail that can’t be deleted is a powerful deterrent to rogue spending, so not only is it easier to catch, but you’ll have fewer instances of it to begin with.
- Save money
Switching to an e-Procurement system can not only save your business time, but most enterprise businesses save millions of dollars each year through reduced fraudulent spending, taking advantage of early payment discounts, and reduced headcount. Some companies have saved the equivalent of two to six full-time positions just by putting into place to scale their operations, without having to add positions to their procurement department.
The function of e-procurement (electronic procurement, sometimes also known as supplier exchange) is the business-to-business or business-to-consumer or business-to-government buying and selling of supplies, jobs, and services over the Internet and other information systems, such as electronic data exchange and enterprise resource planning
Implementing an e-procurement system benefits all levels of the organization, Because the e-procurement system offers greater visibility and control of spending and helps financial officers match purchases with purchase orders, receipts, and job tickets, the e-procurement system also manages tenders via the internet and website for business.