As your organisation grows, it becomes more necessary to introduce a more formal approach to procurement.
This is because losing control over spend or sourcing goods and services from unreliable or disreputable suppliers can become a real danger to the business as procurement takes place on a bigger scale.
What is eProcurement?
An eProcurement system (e for electronic) enables organisations to manage their B2B or B2C sourcing and purchasing online instead of manually. It can start with the sale of a product or service and end with the invoicing process.
eProcurement firm Wax Digital surveyed 200 procurement professionals and found that almost half (49 per cent) cited thirteen benefits of utilising eProcurement. Respondents told us which of these benefits they’d experienced so far, and if this benefit was making a positive change to the business. This unearthed how likely organisations are to feel the changes brought about by implementing their eProcurement system, and how many have already felt these differences as a result. These benefits fall into one of the four following groups:
1.Operational benefits: 83 per cent of respondents expect to improve spend visibility because of eProcurement, and 66 per cent of respondents have already experienced such a change.
Case study: Center Parcs
The holiday villages network achieved a better visibility of its spending because of adopting eProcurement systems, which gave it a detailed and overall view of procurement activity. This has allowed the brand to identify when employees make purchases without going through the necessary processes, completely eliminating maverick spend and making procurement more cost-effective. Also scoring highly in our research was eProcurement’s ability to manage procurement processes more accurately and efficiently. eProcurement smoothens up the buying process to make the job of the procurement professional simpler and more successful.
2. Financial benefits: 78 per cent of respondents expect eProcurement to deliver cost-savings, while 61 per cent says that it already has. It enables organisations to buy products and services more cost-effectively by fixing budgetary guidelines – as well as enabling procurement professionals to accurately record and measure ROI on what they buy.
Case Study: Virgin Active
We worked with Virgin Active to help optimise sourcing processes. It can now consolidate supply bases as well as product and service contracts. This has achieved a 13 per cent reduction in spend for the company, and even saved £1 million following five eAuction events facilitated by the software. Cost savings like this will help any procurement team gain recognition from the wider business and prove that investment in the software was worthwhile.
3. Organisational benefits: 65 per cent of respondents expect eProcurement to reduce risk, while 57 per cent have already experienced this.
Case study Thomas Cook
The businesses procurement processes were manual for a long time, which meant that it was difficult to review supplier contracts and ensure compliancy. We rolled out a contract management system which helped it gain easy access and improved visibility to all its supplier contracts. As a result, Thomas Cook can ensure that it meets all the necessary standards to minimise risk, showing eProcurement to be something that makes business improvements across the organisation.
4. Staff retention: 61 per cent of respondents expect eProcurement to give them job satisfaction, while 52 per cent say this has already happened. Reaping the benefits of eProcurement on a personal level is least common. That said, it can still have an impact on personal productivity, with 71 per cent of respondents expecting to get through a bigger workload.
Mitchells & Butlers moved to an eProcurement system and saw supplier tendering and on-boarding processes reduce from three to four weeks; to just a few hours. The procurement team no longer must go through time-consuming and complex processes when taking on new suppliers, reducing the number of burdensome tasks and giving them a reason to stay in their jobs.
In conclusion we’ve found that the benefits of eProcurement go beyond the procurement department and adds value on more than one level, from the individual using it to the overall success of the organisation. Introducing eProcurement doesn’t just mean taking a different approach to buying activities; it could be a key underpinning for growing businesses to progress to the next level.
Daniel Ball is a director at eProcurement firm Wax Digital