What is The Impact of E-Procurement on a Company?
Not everyone likes change, and the impact of e-procurement on any business can be startling. Some people (and companies) like to keep things going the way they are, confident that if something isn’t broken it shouldn’t be fixed. The problem is that you may not realize something is broken until after you’ve tried a better way of doing things.
Without change, we wouldn’t have televisions instead of radios, cars instead of buggies and houses instead of caves. Admittedly, there are some problems with Internet use (do we all really need to look at another photo of a cat making a crazy face?) but there are things that the internet makes easier—and electronic procurement (e-procurement) is one of them.
Consumers around the world have learned the benefits of e-procurement on a personal level. They use the Internet to shop so they can do it from the comfort of their home, arrange payments easily, make a purchase quickly instead of driving to a store to find the item, and compare items with the click of a button.
How E-Procurement changes a company?
If offers similar benefits, although, unlike the consumer at home, a procurement manager doesn’t place orders while wearing pyjamas. Not counting the ability to wear comfortable clothes, let’s look at the benefits of e-procurement.
E-Procurement Over Traditional Procurement
As mentioned above, the impact of e-procurement is great. It offers savings in time, money and effort. According to BDC the process of finding, approving, and selecting vendors is much easier online than via traditional means. Interactions take place in real time, as opposed to the alternative of waiting days (or weeks) to hear responses and receive paperwork. And payment can be issued easily online, reducing the need to mail cheques or go to the bank in person.
Meanwhile, standard ordering processes and approvals reduce confusion and misinterpretation, saving your company even more time and money. In addition, increased compliance means all purchasing staff follows the same policies and procedures. All this, according to BuyIT, means a reduction in process costs and an increase in profits.
E-Procurement Over No Formal Procurement
The impact of e-procurement means companies are able to use their system to improve transparency in procurement, analyze procurement patterns and data and remove inefficiencies in the procurement system.
For example, a company that only orders batteries when the number of batteries runs low must rely on someone to keep track of the battery inventory, recognize when the level is low, place an order and ensure the batteries are received on time. It also means if something goes wrong with the battery supplier, the company could run out of batteries. If the company analyzes its data and recognizes that on average, new batteries are purchased every six weeks, they could set up a formal program in which the same number of batteries is automatically ordered every six weeks from the same supplier—and get a discount for bulk ordering. Time and money instantly saved.
As BDC notes, a savings of 5 percent in purchasing can equal as much as a 50 percent increase in profit. That’s the kind of math most companies like to do.
Electronic procurement offers many benefits over traditional procurement and over not having any procurement procedures at all. Now all you have to do is convince your boss to let you wear your pyjamas to work.