As businesses seek to optimize their supply chains and find cost savings in the procurement process, eProcurement platforms have been widely adopted. With eProcurement, businesses benefit from greater insight and accountability in the procurement process, both of which contribute to cost control and better relationships with suppliers.
1. Increased Supply Chain Visibility
Supply chain management is an essential business function, yet many businesses lack the level of visibility into their supply chain that is readily available across marketing, manufacturing, and many other departments. EProcurement and spend management platforms allow businesses to consolidate procurement, spending, and supply chain data to facilitate increased oversight and more informed decision making.
2. Reduced Rogue Spending
Rogue or maverick spending is any spending that occurs outside of the guidelines set by management or the procurement department. With rogue spending there is no agreed upon products or pricing, meaning companies are often paying too much for products they may not really need. The problem is amplified for businesses where procurement processes and documents are distributed across various data silos. Since eProcurement platforms empower businesses to tie procurement to verifiable and accountable processes, rogue spending can be discovered, monitored, and ultimately eliminated.
3. Consolidated Supplier Base
Many midsize companies have a complex mix of supplier relationships that have been built in an ad-hoc fashion over many years. Without comprehensive insight, there are almost always instances of redundant suppliers and suboptimal contracts. Supply base rationalization has been a goal of procurement departments for decades, but without insight into procurement patterns across the business, it’s challenging to make changes without causing disruption. EProcurement can provide the data and analytic tools that businesses need to reshape supplier relationships along more effective lines.
4. Improved Supplier Relationships
The most cost-effective supplier relationships are collaborative rather than purely transactional. By working together, buyer and supplier can tackle challenges, create effective solutions, and implement efficient end-to-end processes. But collaborative relationships are harder to build when information flow between the parties is constrained. EProcurement platforms play a key role in achieving seamless information flow between buyer and seller.With eProcurement, supplier eCommerce, and cost-effective integration between the two, both sides of the transaction benefit from reduced costs.
5. Reduced Procurement Errors
Human error is a major cause of cost inflation in the procurement process, especially when manual workflows force high-touch human processing of purchase orders, invoices, and other procurement data. It’s all too easy to make mistakes when transferring order values, quantities, and dates between natively incompatible systems. These errors can create misunderstandings between buyers and sellers that can have a catastrophic impact on the efficiency of a business’s supply chain. Spend management and eProcurement platforms, combined with a comprehensive supplier enablement solution, can facilitate end-to-end automation that can eliminate many of the errors caused by manual data processing.
EProcurement on its own isn’t a complete solution to supply chain cost management, but it is an essential component in creating collaborative supplier relationships, reducing error, and taking control of spending and procurement.