Invaluable to their companies, procurement professionals possess the skills required to balance costs, manage supplier relationships, fulfill social responsibility and deliver massive returns. Moreover, they’re aware of the innovative methods that can help their company gain a competitive advantage. Talking about innovation, many procurement professionals today are turning to technology to perform their duties efficiently and cost-effectively and make positive contributions to their businesses.
Technology isn’t just a catalyst for change, it is also enabling it. Businesses that do no invest in technology-driven solutions run the risk of falling behind. Coming back to procurement, technology has completely changed the buyer-supplier relationship. The changes in procurement brought about by technology are a plenty. This includes the use of software to manage supplier data and find out all sorts of information about the suppliers you work with. While the use of technology in procurement is a relatively new practice, it is by far the biggest change that procurement has undergone to date.
Technology is constantly changing in procurement and companies are always on the lookout for newer, innovative technological systems that could improve the speed and quality of their processes. This is one of the reasons more and more companies today are looking to hire procurement professionals with sound knowledge of the latest technology/innovations. Technology has made the job of procurement professionals simpler and less risky. Thanks to increased data volumes, procurement professionals can manage risks better. Moreover, they can use analytics to accurately track savings and utilize e-sourcing tools to improve the way they source and communicate with suppliers.
At least a third of the overall budget of most companies goes towards the purchase of goods and services. This makes procurement critical to the bottom line. Considering this, you can dramatically improve efficiencies and cut costs by investing in technologies that improve your procurement process. In short, acknowledging the importance of technology for procurement is in your own interest. Following is how technology is changing procurement.
More Informed Decisions Are Being Made
Today, businesses are able to make smarter and more informed procurement decisions. The reason for this is use of technology in procurement processes and the consolidation of data-sharing across buyer behavior, ratings and purchase history over a period of time.
Faster Response Times
The introduction of new marketplace technologies has made procurement quicker and easier than ever. Using sites such as Amazon to source, make purchases and arrange delivery of items, buyers can now take advantage of many online procurement possibilities.
The Rise Of E-Procurement
Commonly known as supplier exchange or electronic procurement, e-procurement is the business to business or business to customer purchase and sales of work, services and supplies performed over the internet. Slowly but surely, businesses are starting to understand how e-procurement works and how it can be implemented to yield benefits. Probably the biggest change in procurement brought about by technology, e-procurement can help businesses in the following ways:
By minimizing the possibility of human error, e-procurement helps businesses save money. The moment you digitize something, the cost for running it reduces. By eliminating paperwork and digitizing this part of the procurement process, e-procurement helps reduce costs. Finally, by enabling structured supplier relationships, e-procurement minimizes external spend while improving supplier performance.
Ability to Keep Track of Spending
E-procurement allows you to track transactions via a single source. The result of this centralized transactions tracking is full reporting on payments made, orders processed, items purchased and requisitions. In addition to this, e-procurement ensure compliance with existing and established contracts.
Reduced Transaction Time
Since you’ll be doing most of your work online, e-procurement will help to reduce the transaction time significantly. With an e-procurement system, you no longer have to worry about following office hours as everything you need will be available online. Often, the suppliers you’re working with are in a different time zone. In case you find yourself in such a situation, you can take advantage of the online based e-procurement system to reduce your transaction time even more. Sometimes, these processes do not require any human intervention. This saves you time which you can use to be productive elsewhere. More time means more work can be done. So, it’s a win-win situation for you!
E-procurement has simplified the procurement process. Today, procuring the items you need is as easy as buying groceries via an app. The use of internet in procurement has given birth to electronic catalogues. Using an e-catalogue, you can pinpoint exactly what you need. Moreover, to save time, the prices are all put in the same catalogue. Until you’ve picked the exact product you want, you don’t need to call or email anyone.
Using an online requisition and ordering system, you can obtain the items you want from a catalogue of approved items. As they no longer have to process orders and handle low value transactions, procurement staff can focus on strategic sourcing and improving relationships with suppliers. This results in increased productivity.
As seen above, e-procurement can help your business in a number of ways. However, to fully realize its advantages, you need to have the proper systems and processes in place. To ensure success, you need an adequate, fully-integrated e-procurement approach. If you have the right approach, e-procurement can ensure significant bottom line benefits including controlled spending, process efficiencies, cost reduction and compliance.
A powerful enabler, technology is here to stay. The importance of procurement technology is something that many companies have started to realize. Its benefits to the bottom line should be reason enough for you invest in procurement technology and make your procurement processes technology-driven.