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Use of eProcurement software evolves to mitigate costs, risks and add strategic insights, report says

10/15/2019 By

As business executives become more interested in the use of electronic procurement software — or eProcurement — as a means to bring about more proactive results, industry leaders have begun to use the technology to target new methods of cost reduction and to yield growth and insights amid evolving industry standards.

In a recent report by Levvel Research, “2019 Procurement Insight Report,” experts discuss industry trends and business spend management strategies, which were collected in a market-wide survey conducted in April 2019. The research, sponsored by Coupa, evaluates how procurement automation software is being implemented and its effects throughout the industry. In Part 1 of this series, the report said one trend is that more business that are smaller and mid-size companies are considering the switch to digital procurement solutions.

In this article, we’ll look at what the study found about companies that have already adopted digital procurement.

The research notes that the strength of procurement at any given company is, for the most part, influenced by how a company views the role of procurement within its overall operations.

“Although procurement’s place is never fixed — it naturally shifts in importance, function and operation as a company grows — for the majority of organizations, procurement operates as a strategic arm within a tactical back office,” the report states.

According to the survey, the majority of procurement departments view themselves as playing a key role in ensuring their company’s financial stability by cultivating competitive and controlled purchasing and maintaining strong relationships with their suppliers.

The research indicates that among the initiatives being used to implement eProcurement software at various organizations, 47% find it useful in efforts to enhance visibility into supplier data, quality and potential risk. At the same time, 45% of survey respondents found the technology useful in efforts to implement sustainability and ethical purchasing policies, while 44% said their company believes it is also an effective tool for contingent labor/services procurement.

The eProcurement software can also be leveraged to integrate requisitions, purchase orders, receipts and invoices into one system, the research states.

“This enables users to view the entire process within a single interface, increasing visibility into transaction data and allowing it to be used to enhance operations,” the report said.

Baseline eProcurement software modules include requisition management, catalogs, order lifecycle and PO management, supplier management, receiving and reconciliation, and reporting and analytics, according to the report.

Purchase requisition creation and workflow tools can allow for organizations to have improved control over employee spend, while electronic catalogs function as online marketplaces that enable users with access to extensive details and competitive pricing information regarding various products, the report notes.

In terms of order lifecycle and purchase order management, the research states that with the use of eProcurement software, purchase orders can be created automatically using an approved requisition and transmit the order to the supplier.

“This gives an organization visibility into the status of the order throughout its fulfillment and eases communication with the supplier,” the report said.

When used for supplier management initiatives, eProcurement software can also enable the use of advanced self-service supplier management tools and self-service portals to allow for suppliers to communicate with buyers. These tools can allow for suppliers to accept purchase orders, oversee the status of invoices and payments, and update their profile and payment information, the report said.

When it comes to receiving and reconciliation, organizations working to improve their purchasing must weigh the costs, benefits and vendor performance trends, the research states. The analytical technology offered by eProcurement software can provide business leaders with the insight to observe expenses by type, department and region, as well as to prevent unnecessary spending.

The study also profiles the end-to-end capabilities of Coupa, saying its “holistic business spend management (BSM) suite encompasses the core transactions for spending money: Procurement, Expense Management, Invoicing and Payments. It also includes Strategic Sourcing, Contract Management, Contingent Workforce, Supplier Management and Spend Analysis — all enriched by cross-company Community Intelligence.”

Not everyone chooses a full suite. According to the market survey, requisition workflow and purchase order management are the most widely adopted eProcurement features currently in use today. Additionally, 50% of survey respondents said the software is useful in terms of supplier information and risk management, and 45% of respondents find the technology beneficial to their contract creation capabilities and integration with contract management tools, according to the report.

“The role of procurement departments is rapidly evolving and expanding due to increased complexity, technology and globalization, and supply chain management and contingent labor roles have increasingly become procurement functions,” the report said.

Representatives state in the report that the use of procurement should remain focused on reducing rogue spend while implementing emerging technologies and expanding global operations.