8 Benefits of Procurement Technology Tools

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Spend Matters welcomes this guest post from Anisha Khushlani, a senior consultant at GEP.

A wide variety of industries are adopting technology to automate supply processes, bringing significant bottom-line benefits to companies by allowing greater productivity, visibility and cost efficiency. At a high level, e-procurement provides the opportunity to increase efficiencies in business transactions and enhances negotiation leverage for firms. Use of technology is one of the key metrics used by benchmarking firms to measure maturity of procurement organizations. So, it’s important to find the right tool and reap the benefits.

Some of the key benefits of going the e-purchasing route include:

  1. Better spend visibility and lower costs. E-procurement structures spend across suppliers and centralizes tracking, which helps leverage volume and lower costs for the buyer. This allows firms to track cost reductions on a continuous basis and identify and address any gaps. It also helps ensure contract compliance, track vendor SLAs and implement scorecards, leading to higher savings and increased productivity from suppliers.
  2. Operational performance. E-procurement helps automate internal procurement processes such as purchase order tracking, RFX events and supplier evaluation, leading to higher operational efficiency. Since these activities can be completed without human intervention, it further reduces transaction time and helps expedite downstream processes.
  3. E-catalogues and increased standardization. Electronic catalogues make supplier product offerings available electronically and provide buyers more visibility into product and price information. With the increased popularity of these catalogues, suppliers are moving toward offering a more standardized product, thereby providing buyers the ability to compare offers across suppliers more easily.
  4. Internal integration. E-purchasing eliminates information asymmetries and improves collaboration across internal departments, providing maximum value to the organization.
  5. With all documents stored electronically, e-procurement decreases engagement turnaround time by making reusable templates available, acting as a repository of current vendor contracts and reducing the time involved in repetitive tactical steps with increased automation — hence simplifying the end-to-end procurement process.
  6. Increased data accuracy. When the process is conducted electronically, the resulting streamlining reduces opportunities for error. The repository of documents also makes it easy to refer to older orders and contracts to ensure contract compliance, thereby reducing data inaccuracies.
  7. Global procurement. E-procurement applications support various currencies, languages and logistics options, providing the ease to source from countries across the globe. Web-based procurement also connects the buyer to suppliers around the globe, providing access to a wider range of products and services to choose from.
  8. An electronic procurement system helps to standardize workflows and reduce deviations from the process. Some of the benefits of moving online are routing transactions through the right channel and getting the correct level of approval, using existing suppliers and referring to current contracts, and preventing off-contract purchases.

E-procurement automates the procure-to-pay (P2P) process, making it more seamless and robust, thereby helping organizations gain both tangible and intangible benefits. It also acts as a repository, which helps in automating several workflows.

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