How to Improve Your Supply Chain with eProcurement

External purchasing is most businesses’ most significant expense. For many others, procurement spending is second only to wages. Bain & Company, a management consulting firm, estimates that companies could save up to 12% of purchasing costs by increasing procurement efficiency with digitization and automation. For the Global 5000, that could mean savings of up to $86 billion annually.

Bain identifies several automation strategies to improve procurement cost efficiency, but eProcurement is by far the most popular and effective. Platforms focused on eProcurement spend management such as Coupa and Jaggaer combine a range of digitization, automation, and integration tools for many common procurement tasks. They include purchasing, inventory management, contract management, purchase requisitions, and orders, and spend analytics.

By adopting eProcurement, businesses can:

• Integrate their software with seller eCommerce stores via PunchOut catalogs and purchase order automation;
• Reduce manual administration work, freeing procurement resources for tasks that generate value;
• Accelerate transactions and shorten the procurement cycle; and
• Access accurate and comprehensive information about supplier relationships and spending patterns.

These are generalized strategic benefits, so let’s have a closer look at some of the concrete operational benefits eProcurement can bring to B2B businesses.

Boost Procurement Productivity

Because procurement is document and data-intensive, companies waste many hours manually generating, tracking, reconciling, and communicating documents. Procurement automation reduces manual administrative work, freeing procurement professionals to use their time more productively.

An integrated eProcurement platform automates the exchange of data and documents between buyers and sellers. For example, when a buyer approves an order, it can be transferred automatically to the seller’s integrated eCommerce store, creating a sales order.

Accelerate the Procurement Cycle

Manual procurement slows transactions. Think how much time orders and invoices spend waiting in email inboxes or even in the mail. Manual processing by buyer and seller introduces numerous delays, which means orders take longer to be approved and buyers wait longer for delivery.

An eProcurement system automatically routes documents to the right place and makes sure they get the attention they need. There are many benefits to faster order processing. One benefit is shorter delivery times reduce the stock a business has to keep on hand, cutting inventory management costs.

Increase Order and Invoice Accuracy

IBM identified order accuracy as one of procurement’s most significant challenges in Key Challenges And Best Practices For B2B Fulfillment. Human error is a dominant cause of inaccurate orders, and it’s unavoidable when procurement professionals are forced to rekey data manually.

Bad data reverberates throughout supply chains, increasing costs, damaging business relationships, and, in the worst cases, creating legal liabilities. Integrated eProcurement systems eliminate manual data entry errors because data is transferred automatically between platforms.

Identify Cost-Saving Opportunities

An eProcurement platform allows B2B buyers to centralize supply-chain data. They can see what they buy and from who they buy it. A comprehensive overview of purchasing data empowers buyers to identify favorable prices and other beneficial factors. That’s not possible when purchasing data is siloed in disparate systems throughout the business.

Take Advantage of Buyer Discounts

Buyer discounts are another advantage of comprehensive centralized purchasing data. EProcurement allows buyers to spot duplicate purchasing from multiple suppliers. By consolidating purchasing with a smaller number of suppliers, buyers often benefit from bulk-purchasing discounts.

Additionally, many B2B sellers offer discount pricing for buyers who transact over automated systems. Automation also reduces sellers’ costs, motivating them to move buyers towards automated self-serve options.

Reduce Rogue Spending

Rogue spending occurs when employees make purchases outside of the procurement department’s managed processes. It’s common in businesses without a rigorous and convenient procurement system. Managers and staff buy the goods and services they need, but they disregard official procurement policies. Consequently, the business overspends on purchases from unapproved sellers without pre-negotiated contracts and discount structures.

EProcurement reduces rogue spending by enforcing procurement policies and making it easy to buy from approved sellers. When seller eCommerce stores are integrated via PunchOut catalogs, employees can search for authorized sellers and products within the procurement software, ensuring purchases follow the business’s approval processes and that purchasing data is stored correctly.

Enhance Procurement Forecasting

To manage procurement efficiently, businesses need a clear understanding of their current spending. Only then can they accurately forecast future requirements. Forecasting is all but impossible when many purchases are unmanaged, and procurement data is spread across multiple systems.

By centralizing procurement on a modern eProcurement platform, B2B buyers gain sophisticated forecasting capabilities. For example, Coupa’s dashboards include a Forecast feature that helps businesses to predict spending several months into the future.

Modern eProcurement systems help B2B businesses to improve supply-chain efficiency and reduce procurement costs. If your business manages procurement manually in 2021, eProcurement could be the solution to its supply chain challenges.

About the Author: Brady Behrman

Brady Behrman is the CEO and founding partner of PunchOut2Go. As an entrepreneur with experience and proven track record in building technology businesses that focus on client success innovation, Brady and his team help organizations of all sizes around the globe adapt to the ever-evolving, complex B2B Commerce & eProcurement technologies. For more information on PunchOut2Go, be sure to check out their Facebook, Twitter, LinkedIn and YouTube pages.

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