The world we live in today is highly digitalized. Some may argue that technology is taking over our lives, and it is changing our habits in a bad way, but that’s the simplistic view of the matter. It is a fact that technology addiction exists, however, that comes from overuse and misuse as a leisure activity.
When it comes to business, technology is more than welcome. In fact, business digitalization has proven to be crucial for profit increase and cutting down on costs.
Every company has their suppliers and customers. The traditional way of procurement, such as face-to-face interaction, phone calls, and emails, and documenting the info in an Excel spreadsheet have already proven to be not as efficient as we would like them to be, simply because they are too time-consuming.
Imagine having to speak to 20 people every day and then document the requirements in a spreadsheet. It will take too long, it needs to be done manually, and what are the odds of you forgetting something? The higher the volume of work, the higher the chances of missing something simply because our concentration levels cannot remain at their peak at all times.
Electronic procurement or eProcurement refers to all purchasing and selling activities that a company does by using the Internet through an automated system. It might not sound like anything exciting on first glance, yet the benefits that it can bring to your business make this concept worth considering.
Here are some of the top reasons why investing in an eProcurement should be a thing on your bucket list (or maybe even Christmas list!) for 2019!
Cutting Down Costs
The initial thought when speaking about an investment is, clearly, the cost of that investment. One of the biggest mistakes that a lot of companies make is assuming that they are saving money by not investing in new assets. A mindset like that is one of the crucial factors that can be a great setback.
The biggest cost that you will cut down on by investing in an eProcurement system is the labor cost. Let’s say you need to find a new supplier for a material that you use in your production process. By doing that in the traditional way, you or some of your employees need to go online and do research, then pick up the phone and negotiate with the potential supplier. All of that data needs to be then sorted in a document. Then it needs to be taken to an authority within the company for approval. Can you imagine how long that takes?
An eProcurement system has the ability to do all of that research for you in a very efficient and quick way. Additionally, the eProcurement system will not favourize any suppliers on a subjective basis since as we all know, someone might have personal reasons to push one supplier over the other.
By adding the pre-approved supplier on your system, employees will know whom they need to go to, and since the suppliers are pre-approved, they won’t be knocking on your door every time they need to get even the simplest things like pens or envelopes.
Better Collaboration With Business Partners
How often have you said to yourself “I will do that later”, then push it to one side and completely forget about it until somebody starts chasing? Forgetting to release a contractor with a PO number, paying penalties because you missed an invoice or missing on an early-payment discount are just a few of the things that happen in the unautomated business world.
By investing in an eProcurement, you are minimizing the chances of making costly mistakes because the system is here to do all of that for you. With one such automated solution, you will not have to double check everything to see if some of your suppliers are charging you more than agreed since the system will flag that immediately.
Quick Return on Investment
As mentioned already, when investing in something we are all most worried about if the investment will prove to be profitable i.e. if the return on investment (ROI) will surpass the initial cost. According to a recent study, the ROI that an eProcurement system can bring to a company can be up to 720% of the initial investment!
Controlling and Monitoring Purchases
As a business owner, you have probably lived through the following scenario: You are getting low on stock on certain material, but that flew completely below your radar. By the time you notice it, you are already using your last supplies and are in a rush to order more. However, your usual supplier cannot deliver the goods on such short notice.
You are now faced with two choices: you either stop production until the supplier delivers the product or go somewhere else and pay a much higher price for the same thing. Most businesses would go for the second option which is known as maverick buying.
By employing an eProcurement system, you can always stay on top of your needs and even set automatic reorder points. In that way, you will avoid being caught between a rock and a hard place and will never again pay more just because of something that was overlooked.
On top of that, purchases done through an eProcurement system are more transparent and easy to track. The system keeps records of all purchases which you can check at any time. Yes, you can throw away all of those folders that you have stacked on your desk over the years.
Exploring the Market to Find the Best Deals
You have your trusted suppliers that you have collaborated with for years. Everything is going well and because of that, you haven’t even checked to see what others have to offer.
Let’s say you have been using the same shipping company for years. You sometimes have to go around and chase a delivery or they might call you saying that they lost a parcel, but they are not charging too much which is why you are still using them. But when was the last time you checked what else is out there?
In the business world, things tend to change quickly and chances are, from the last time you reviewed shipping companies until now there are several new companies on the market. And you have no idea what they offer.
Your eProcurement system can quickly do the research for you. All you need to do is just define the parameters. You can even exclude parameters that are obsolete for you. You will probably find another contractor that charges the same or less but does a better job.
The business digitalization is happening for a good reason – it takes the pressure off the workers and it leaves them more time to focus on new ideas and execution. By investing in an eProcurement system in the new year you are opening the doors to steadier and more transparent business management that can effectively cut down the costs and increase ROI.