Why Are Businesses Turning to E-Procurement to Simplify Processes and Build Resilience?

Jun 14, 2022
4 min read

There was a time when the procurement process used to be a small part of business operations. People used to contact the suppliers and source materials for further production or sale based on the lowest prices. In the late nineties, the main concerns of the businesses were suppliers' consolidation, spend analysis, customer relationship management, and supplier relationship management, among others.

Nonetheless, with the massive change in the business dynamics, today procurement has become a strategic function that can make or break a business. When most companies rely on consistent and quality supplies of goods, the manufacturing and trading companies need to ensure that their purchase processes are flawless.

Apart from managing vendors, they need to ensure prompt placements of orders, quick approvals, and issue of purchase orders. However, all these functions are still time-consuming with outdated systems. The increasing complexities in business models, recession, and market volatility have surged the need to transform businesses using cloud-based models quickly.

Now comes the question of the latest technology that ensures streamlined procurement processes; the answer is e-procurement!

What Is E-Procurement?

As the word depicts, E-procurement is the digitalization of the entire procurement process. It comprises an automated and cloud-based system that keeps online track of the purchase requisition, issues digital purchase orders, punches automated approval requests, and integrates the procurement database with its finance software systems.

Purchase officers can generate actionable, data-driven insights from the company's purchase-related data. Whether travelling or off-site, it helps approve invoices on the go, making the purchase process prompt and effective. Procurement teams no longer have to spend hours and become prone to manual errors in tallying the purchase orders with invoices. Everything is automated and cloud-based!

With e-procurement tools, companies can bring down their expenses and acquire competitive positions in the market. They have opportunities for better category management, forecasting, and sourcing strategies using the insights produced by the software. With real-time information, businesses can ensure the availability of goods at the right time, at optimum quantities, and at the right price.

How Does E-Procurement Work?

Companies or firms can create customizable workflows and documents with E-procurement software. The system auto-fills the purchase documents such as purchase orders and purchase requisition forms using the correct information from central servers.

While purchase departments get stuck with tedious tasks, it frees up the time for the teams by automating these tasks and essential functions strategically. The staff no longer have to prepare new documents from scratch for each supplier. The E-procurement technology files all the important reports, draft contracts, assignments, and necessary documents while adhering to company policy and legal compliance.

Some software offers advanced features of suppliers' management. Through these, companies can evaluate and track the performance of the vendors. Moreover, it facilitates the onboarding of the new vendors and real-time collaboration with them.

There are no loopholes or manual errors with automated three-way matching (purchase order to invoice to order receipt). Other risks of human errors such as slip-ups in paperwork, budgeting, accountability, and data transfers between the platforms are minimal with e-procurement.

The best feature is that this software generates real-time reports and analytics, enabling the purchase teams to use the relevant data for further planning and strategizing. The technology offers a bird-view for the managers to examine price quotes from different suppliers simultaneously, allowing them to compare and make quicker decisions. Business owners can review their spending patterns and control the excess cash flow with a visual analytics dashboard.

Why Is E-Procurement Important for Businesses?

In a survey of FY-2021, it was reported that more than 70% of the companies faced negative impacts on their business, whereas 57% of companies confirmed that their supply chains were entirely disrupted. However, only 2% of companies said they were prepared for pandemic disruptions. According to the same survey, the experts opined that using e-procurement technologies will improve the procurement process's speed and quality. It will allow for increased responsiveness, agility, and flexibility, which are essential for establishing change-ready systems.

In an interview with Times of India, Kadimisetty, co-founder of Aerchain, said that a robust supply chain and infrastructure security are required for economies to recover in the post-pandemic world. Preparedness strengthens the businesses, allowing them to respond to issues proactively.

More Savings

With the e-procurement strategy, businesses may save up to 50% on their purchasing department's costs. While a sole focus on savings may seem outdated in today's value-oriented business environment, business resilience necessitates the procurement team's commitment to rigorous spend management, better cost control, and savings generation to maximize the corporate bottom line.

Better Performance and More Value

In one of the Harvard Business Review, experts suggested that an effective procurement strategy is a must to build resilient businesses. E-procurement moves up the value chain faster, allowing teams to go beyond the bottom line. From expenditure analysis to supplier management systems, every aspect of procurement technology offers a unique opportunity to use data to improve performance and value.

Better Suppliers' Relationship

While many businesses face several issues with suppliers' relationship management, E-procurement enables companies to keep close contact with their suppliers. It offers platforms that facilitate access to information 24/7. That makes the process of receiving and completing orders easier. Firms can shorten their purchase cycle and optimize their procurement process with fast-forward, cloud-based technology.

With advanced integrated functionality that offers more than just procure-to-pay (invoicing, catalogue management, and requisitioning), E-procurement leads firms to better competitiveness and resilience. It allows organizations to explore contract management, suppliers' information, embedded analytics, streamlined payments, and much more.

To conclude, e-procurement is the future of supply chain management, and adopting it will boost efficiency and save costs. Digital procurement ensures proper visibility of the vendors, contracts, and purchase orders and provides control over unnecessary spending. All the functions, such as placing purchase requests, managing orders, and generating electronic receipt of payments, can be streamlined using a single platform.

There are various software and systems available in the market which you can use to optimize your purchase/procurement department. Also, the best part is these solutions do not require any technical knowledge. They are user-friendly and customizable. Supplier innovation and collaboration are now more flexible than ever.

Finally, building resiliency while streamlining the processes is the top priority of the companies looking to thrive in the highly dynamic business environment. In the experts' opinion, there is no better way to achieve that than using e-procurement systems.