CIPS Knowledge Manager Sheena Donaldson explains why eProcurement is well worth the initial investment
There are a number of significant benefits to introducing eProcurement into your organisation – firstly, it frees up employee time, so if you can utilise your resources in a better way to improve time management, you will see a drop in overall procurement costs, which directly affects your bottom line.
In addition, eProcurement gives you improved traceability across your supply chain. Again, being able to see exactly what is being ordered and what the costs are at a glance helps to take time out of the procurement process to run analysis and improved reporting. This is particularly important with indirect and MRO procurement because there are often huge volumes of orders among a large number of suppliers, so the visibility that eProcurement provides is really important.
"eProcurement helps reduce risk for your organisation "Sheena Donaldson, Knowledge Manager, CIPS
Equally, eProcurement helps reduce risk for your organisation – when you have traceability of all products and parts ordered it helps to trace goods back to source, with a well supported audit process ran alongside an eProcurement system, counterfeit or non-compliant items finding their way into your production process can be significantly reduced. Knowing the source of your goods, and working with suppliers that are happy to feed compliance and traceability info into your eProcurement system is a good way to support risk reduction and give clearer visibility of spend.
When it comes to MRO procurement, the take-up of eProcurement varies quite a lot between industries and companies. Clearly, there’s a cost associated with setting up these systems and not all suppliers support eProcurement, so some spending may remain analogue, but in most cases there are real advantages in moving to a digital purchasing system, and it can actually help organisations to consolidate their supplier numbers, which will also bring cost and productivity efficiencies in the long run.
"There are real advantages in moving to a digital purchasing system, and it can actually help organisations to consolidate supplier numbers "Sheena Donaldson, Knowledge Manager, CIPS
The key to selling in eProcurement internally is to clearly identify the upfront costs and the long-term savings, and it should soon start to make sense for senior management to invest in new systems. At CIPS, we’re finding that more and more companies are switching to eProcurement, partly for the benefits it offers their business, but also because they can see competitors making the investment, and they are looking to improve productivity and remain competitive.
When it comes to setting up eProcurement, there is no “one size fits all” solution. My opinion is that it’s usually best to make the switch fully to eProcurement across your organisation rather than doing it piecemeal over a number of years.
The downside of this is that there can be a lot of disruption across the business during the initial switch over. Companies often need to run the old and new systems concurrently and there can be a steep learning curve for employees.
However, it really is a case of “short-term pain for long-term gain” and if you can successfully get internal buy-in from everyone who is going to be using the new system regularly, the process will be much smoother and a few months down the line the benefits to your business will be clear.
When it comes to investing in particular software or eProcurement platform, it is a very individual choice for each organisation. The key thing, as with any investment, is to ensure you get the maximum lifespan for what you’re investing in, so it’s important to look at your needs and choose a platform that suits your current and future procurement plans.
You also have to accept that technology is evolving fast, so you have to expect that further investment will be needed in the future, but by getting the right fit in the first place, you have the best chance of maximising the return on investment and realising the benefits of eProcurement for as long a time as possible.