Monday, September 22, 2014

3 Key Benefits of E-Procurement for Businesses

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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 2nd 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-
  •     E-Procurement 
  •        Legal Aspects of Purchasing 
  •      Overseas Buying
  •      Vendor Management
  •      Negotiations in Purchasing
  •      Financial Aspects of Materials Management
  •     Techniques for Control of Inventory
  •     Modern Storage and Warehousing Practices
  •      Logistics & Supply Chain Management Concepts

1 comment :

  1. E-procurement is the new age procurement and has many advantages over old procurement service. Lotus Procure is a very nice website for managing E-procurement.

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