A wake up call to e-procurement

Online shopping is becoming ever more popular and it is clear why: it is easy, transparent, and often much cheaper than walking into a store. We can apply the same rationale to e-procurement.

Today’s businesses face the dual challenge of intense global competition and economic uncertainty. Agility is used as a competitive weapon and has become a watchword for C-level executives when it comes to spending. In other words, they need to be able to cut costs in line with falling revenues and identify and negotiate the best deals.

The problem with traditional procurement systems is that they are inflexible and prevent executives from making the rapid and informed decisions necessary for an agile business. Research demonstrates that businesses are missing up to $1bn annual costs savings because of procurement systems that prohibit effective decision-making.

As businesses grow the challenge of controlling spend becomes ever larger. Cash leaks from every department of the business and controlling this flow without the right tools and processes is an impossible task. Renegade spend can result in hard won discounts remaining unused and visibility of spend disappearing.

Many businesses use catalogues to manage a large supply base but changes in availability and pricing means keeping catalogues current, compliant and available to all quickly become a never-ending task. E-procurement allows buyers to collaborate closely with suppliers, controlling spends, updating quickly on changes and allowing both sides to get the best out of the relationship.

Suppliers are no longer merely providers to a business but partners and a source of competitive advantage. These new collaborative relationships require governance and management, and progressive businesses see collaboration with suppliers as key.

E-procurement places the user at the centre of the procurement process, allowing a whole new level of visibility and access to actionable information. Businesses are able to source, manage and collaborate with the right suppliers and bring a greater volume of spending under control.

However, the success of an e-procurement programme is dependent a positive end-user experience. Cumbersome systems result in frustration from users and result in a lack of compliance. Applying the characteristics that have defined the success of ecommerce – particularly its simple and intuitive user experience – to e-procurement will encourage widespread use and better control.

So what do companies who wake up to e-procurement get? Happy executives who can make quick, informed decisions, a healthy balance sheet and productive supplier relationships that bring real competitive benefits.