The digitalization of the procurement process is something that will happen. Many procurement managers and small businesses are already heading in that direction, and suppliers will soon learn that they can benefit from the digitalization of the procurement process and encourage buyers to use it.
Yet, this shouldn’t be fought. For buyers, there are just as much, if not more benefits for digitizing the procurement process. Here are some of the ultimate benefits that will help guide your business to more profitable times.
A Quick Return On Investment
Over a third of procurement managers believe that a quick return on investment from e-procurement solutions is one of the most important benefits of digitalization, according to a ProcureCon Europe study. Other research has shown that e-procurement can offer 720% ROI for those using it. This also demonstrates that not only will the return be quick, but it will also offer a substantial benefit to businesses who adopt it.
Costs Reduce Noticeably
There are times when cost-savings are put into place but there’s limited or almost no noticeable difference. Sometimes that makes you think about whether the time and money invested was really worthwhile. However, when digitalizing the procurement process you can see noticeable differences in the costs to your business. This isn’t just beneficial to your bottom line, it’s a satisfying feeling that improves the organizational morale.
The actual amount saved per business varies, but some organizations such as The German Association for Supply Chain Management, Procurement and Logistics state that savings can be between six and eight percent.
Better Purchasing Decisions
While many people focus on the best price, there are other factors to consider. Some businesses have found that those who focus on price in the bid may end up paying more when other factors such as delivery, quality, etc. are considered as well. Yet with a digitalized purchasing process, all the information can be reviewed side-by-side so gaps in the proposals can be spotted quickly. And with the right software, you can ask questions of vendors.
When decisions aren’t optimized, then maverick buying results can happen. This can increase costs significantly.
Streamlining Your Processes
Have your purchasing processes streamlined so there’s less work for you and your team to do. This can be really beneficial in many different ways. First, digitalization takes away some of the mundane jobs from your team allowing you to give them more complex tasks that can add real value to your business. Second, you can ensure that tasks that used to take hours are now automatically done by your e-procurement software. Therefore, when you need a report, it’s there in seconds, not hours.
Another benefit is that human processing can sometimes allow errors. This can be when someone makes a typo or misunderstands what’s needed. When this happens it can take hours to discover the mistake and then hours to correct it. The result is a lot of wasted time for your business and a frustrated purchasing team.
Streamlining helps you to not only do the work quicker, but it’s another way that digitalization helps to decrease costs.
This is by far one of the best benefits for using an e-procurement system. When everything is done manually, you might feel you have control, but as soon as you need something that isn’t standard, you can see people scrambling to find that information you want. Also, because you can’t see all the information you need to make informed decisions, you really aren’t in control, it’s the sellers who are when they present information in ways that highlight what they want you to know.
With digitalization, you can see everything in a standard format and have all the information quickly. Therefore, digitalization offers you control when you need it and at all times. This control also helps you to adhere to strict compliance rules that your local, national or international laws require.
Digitalization of the procurement process makes buying easy. The information is easy to read, many of the processes are automated so your team don’t need to complete complicated forms, and reports are generated automatically for you and your management team. This makes the procurement process easy for anyone to do, whether you’re a specialist buyer or not.
There are numerous benefits for the digitalization of the procurement process. These advantages offer ways to make your procurement systems efficient and improve the profitability of the business through cost-savings and by increasing the amount of time available for business improvement initiatives.
If you want to know more about how e-procurement processes can help your business, contact a member of our team today.