E-procurement is being implemented by businesses of all sizes in a variety of industries. It allows for the removal of time consuming manual processes and enables organisations to become more efficient and cost effective. While of little use to those working in the B2C sector, e-procurement is structured to help businesses operating in B2B when it comes to the sourcing of suppliers, the selection of products, the placing or orders and the management of invoicing and making payments.
How does e-procurement work?
There are three main steps involved within e-procurement:
Companies will access a specific online platform, such as a marketplace, which will contain the supplier’s available stock. This will also include any specific conditions related to delivery, discounts, minimum orders etc. The company then selects the goods and places their order request which can be then be integrated into their existing purchasing system.
After the order has been confirmed via the platform or an electronic document the products can then be prepared for delivery to the company.
The invoice is typically sent via PDF or some other form of trusted electronic document, which can then be transferred into the company’s payment system and processed.
What are the advantages of using e-procurement?
One of the most laborious tasks faced by any finance team is the manual processing of supplier invoices. Not only is it extremely time-consuming but it can also the cause of a lot of costly errors. From missing VAT and PO numbers, to non-matching line items and incorrect financial values, these are just some of the common mistakes that occur. The rectifying of these issues, along with the manual inputting of data, not only slows down the process, but also the payment of the invoices. The use of e-procurement allows businesses to automate these tasks, and remove the need to manually enter the data into the system.
Finding new suppliers
Sourcing reliable suppliers can be a time consuming task when done manually as the need to ensure risks are being managed elongates the process. E-procurement software allows companies to use the auction and online tendering features it offers so they can create the best value while optimising strategic sourcing outcomes. Using this electronic method means less paperwork is required while overheads from supplier negotiations can be processed more efficiently. The risks involved are also a lot lower, as only suppliers who meet the set criteria will be able to submit a tender for consideration.
Faster lead times
The use of an e-procurement system gives users instant access without any downtime waiting for approvals, while paper trails are also eliminated. This creates leaner and far more efficient ordering processes right across the business. This should also translate into much faster deliveries for the company. As the order is instantly available as a packing slip with the supplier, this enables them to ship out the goods in a shorter space of time. This will also benefit the consumer who will be able to enjoy full stock options on a more consistent basis and potentially shorten delivery times.
A key component of any e-procurement system is the ability to have a view on real-time expenditure. This helps with the management of budgets and cash flow, which is more difficult to assess on an ongoing basis when performed manually. The financial reporting features allow companies to track and monitor spend across each department with the simple touch of a button. The end result means organisations have much better control over costs, which then allows them to pinpoint areas where potential savings can be made, making better use of the budget available.