Monday, September 22, 2014

3 Key Benefits of E-Procurement for Businesses

Today’s economical frenzy scenario requires businesses to cut down costs. And one of the best ways to do so is through e-procurement. Hence, businesses switch to e-procurement solutions which give myriad of benefits along with improvement in time-to-market mechanisms & reduction in operating costs to enhance profit margins.

The importance of E-procurement lies in helping businesses avoid costly mistakes & maintain their competitive edge.

This insightful piece of article throws light upon the 3 crucial benefits of e-procurement for businesses.

Get rid of high administrative costs

High administrative costs eat into a large chunk of business profits. When you implement local B2B or B2C e-Marketplace, it automates the entire administration process involved in purchasing. Thus, it makes the business administration a truly paperless mechanism.

Traditionally, procurement has been viewed with criticism for its complexity in terms enormous paper-work. This still chases many organizations.

E-procurement relieves staff from huge administrative burden which is the first major crucial benefit of e-procurement for businesses. It automates key tasks, saves valuable time & ultimately saves crucial money to be used for productive purposes.

Reduction in purchase costs

This is the 2^nd crucial benefit of e-procurement for businesses. E-procurement does not fundamentally reduce purchase costs. However, it empowers the organization to achieve important goals in the following manner-

· E-procurement introduces a system which people can easily use. For instance, it ensures that everyone in business adheres to the preferred supplier rules and preferences. This reduces maverick buying which causes 20% more payment due to buying on an ad hoc basis.

It increases the organization’s buying power with its selected suppliers.

· Transactions with suppliers electronically increase the chances of getting significant bulk discounts from suppliers. This happens as the administration costs of suppliers also plunge.

The reduced ‘maverick buying’ from business employees cause suppliers to become more committed due to assurance of greater share from the respective business organization. Thus a valuable long term relationship is established between B2B or B2C entities.

Reduced Purchase Cycle Time

Certain organizations experience fritter due to their requisition-to-delivery time which may extend for various days or months. This makes even a proper procurement procedure simply unfeasible especially for important and immediate orders and sourcing. This happens because of delays due to paper-based requisitions which require manual authorization for checking budgets & commitments before ordering.

E-procurement offers an efficient e-Marketplace solution. Its inbuilt workflow streamlines business process thus avoiding common bottlenecks by the following ways-

It enables automated check of requisition with the help of pre-configured settings & electronic authorization mechanisms.
It enables complete analysis of business purchase cycle easily thus speeding up the whole process.
It enables the procurement staff to quickly identify common bottlenecks without delays due to internal or external forces.
Simply, it empowers the staff to get the required job done quickly & without sacrificing control!

Note- E-procurement is one essential part of Purchasing & Materials Management. Indian Academy of Management is conducting a practical and insightful business seminar on Purchasing & Materials Management. The goal of this seminar is to make executives and corporate personnel learn how to make purchasing a constant profit centre!

In includes detailed explanation of the following and how it can be used to enhance business profits-