Technology’s Role In Reducing Procurement Costs And Improving Financial Control

eProcurement

Despite there being evidence that modern procurement methods deliver long-term added value and drive efficiencies, a large number of firms may be unwittingly exposing themselves to unnecessary risk because they do not have adequate visibility into their supply chain.

Whatever size of company you’re responsible for, or however you’re managing procurement, keeping a tight control on spending is essential. In turn, ensuring that you have oversight of all purchases and a clear understanding of who is buying what, from whom, and why, is also crucial. All of a sudden procurement becomes a complex process.

Perhaps unsurprisingly, SMEs have been fairly slow adopters of eProcurement technology due to poor ease-of-use, the lack of integration with their core back-office solutions and the perceived hassle of setting up an established supplier network.

However, the demand for additional cost savings, tighter control over expenditure and increased spend visibility has placed a greater focus on new integrated systems which seamlessly combine powerful spend management and eProcurement functionality, which can be hosted and accessed via the cloud.

The 2013 Procurement Pulse

Research from Science Warehouse, in association with eWorld Purchasing & Supply, confirms that organisations are placing authorised expenditure and contract compliance under greater scrutiny. A survey of 263 senior business professionals in the manufacturing, pharmaceuticals and public sector industries revealed that less than half of indirect spend is controlled in the majority of organisations.

Fifty-five per cent of those surveyed admitted that their organisation has less than 40 per cent of spend financially controlled under management. In contrast, 76 per cent stated that cutting costs remains their top procurement priority for 2013 in order to achieve efficiency savings and greater financial security.

Emergence Of End-To-End eProcurement Solutions

Integrated business systems are a great enabler for turning this vision into a reality, and more. End-to-end spend management and eProcurement solutions specialise in bringing businesses and suppliers together to trade online. They combine user-friendly functionality and seamless integration into ERP applications to enable firms to easily compare and purchase millions of goods and services from an established online supplier network in one, unified system.

By employing an instantly recognisable interface (think of Amazon), integrated spend management systems help authorised users to quickly buy the products they need from approved suppliers, at the best prices. In turn you gain greater financial control and, as importantly, an insight into purchasing habits throughout your organisation. This business intelligence is critical for achieving efficiency savings and reducing maverick spending.

Spend management solutions are ideal for companies large and small who want to maintain a tighter rein on costs and cut out the frustration of using different websites and catalogues, along with the time-consuming process of filling out paper-based purchasing forms. By taking this one step further, by integrating with an end-to-end eProcurement system, this ensures goods purchased via an online marketplace are automatically routed via predefined approval workflows thereby increasing purchase-to-pay efficiency by eliminating paper-based processes.

Rapid Return On Investment

By using spend management comparison tools, buyers are instantly able to see which suppliers are providing the best value. While savings will vary, research shows that in most cases, up to 30 per cent cost reductions can be obtained based on a ‘basket analysis’ of the top 50 most commonly bought items. Furthermore, by bringing together ERP, eProcurement and spend analysis applications, organisations can reduce their order processing costs by up to 80 per cent and gain a return on investment in less than six months by streamlining inefficient administration processes.

Compete Or Get Beat

In order to take advantage of when the upturn finally comes, it is vital that businesses have greater insight into spend visibility and historical spending patterns in order to improve supplier efficiency, purchasing control and contract compliance. eProcurement technology not only hands you the keys to gain control of your purchasing, it also fuels the engine to aid better decision making so your business can compete and not get beat.

Andrew Hayward

Andrew Hayward is Managing Director of m-hance, the UK’s fastest growing provider of innovative business solutions to organisations in the mid-market. Since being appointed as Managing Director of m-hance, Andrew Hayward has led the company through a period of unprecedented growth following the acquisitions of several leading businesses including elements of Maxima Holdings plc, Touchstone Group and Calyx Software. Andrew has been with m-hance (albeit under different brands) since 1999, firstly as a sales professional and then as a business head. Prior to becoming involved in the business applications arena, he worked in an accountancy practice and the motor, leisure and logistics industries.