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
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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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