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“ Aberdeen research suggests that automating procurement offers the greatest opportunity to improve processes, increase productivity, and reduce costs across the supply chain. Purchased products and services are the single largest expense at most organizations, accounting for $.50 to $.55 0f every dollar earned revenue.”
“Office supplies and MRO provisions can account for 30% to 60% of a company's total expenditures, yet they remain poorly controlled and costly to process at most organizations.”
Aberdeen Group
“For an organization to effectively manage spending, it must know what it's internal and external demand-side requirements are for general administrative expenses, direct materials, and MRO, and it must effectively
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What is eProcurement?
Purchasing and IT organizations are continuously looking to improve the purchasing practices and systems they use to improve the efficiencies and minimize the spend. The recent economic downturn has helped organizations to be more cost-conscious. The software industry has responded to this business need by producing software systems along the lines of industry best practices of purchasing. They come in different forms (providing various functionalities of purchasing) and names such as eProcurement, Supply Chain Management, Supplier Relationship Management Systems, Strategic Sourcing, Spend Management Systems etc.
These systems provide buying organizations with:
- Easy to use tools to buy, transact and communicate with trading partners over the internet
- An integrated system of strategic sourcing and supplier relationship management
- Ability to integrate with the back end enterprise systems or home grown applications
- Ease and speed of getting suppliers on board
- Cost-effective administration and maintenance of an eProcurement system
Benefits of eProcurement
In the process efficiently managing their spend, buying organizations are adopting eProcurement and related business processes and technologies. By doing so, they are seeing the following benefits:
- Procurement Process Efficiencies
- Shorten Order cycles: Streamline and standardize procurement processes while enforcing corporate policies
- Lower administrative costs: Reduce procurement transaction costs and order cycle times through automation of manual processes
- Realize volume benefits
- Reduce maverick spending
- Reduce inventory costs: Eliminates the need to stockpile supplies to cover the inefficiencies of a manual process
- Improve strategic sourcing: Captures spend data and enables purchasing department to focus more on strategic tasks than on merely handling transaction processes
- Reduce order errors and RTVs: Using pre-sourced, pre-approved supplier catalogs and utilizing direct electronic communication to dispatch the orders reduces end-user errors
- Rationalize and manage supplier relationships
- More spend visibility across the organization
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