How Has Cloud Computing Changed Procurement?
Expert forecasts are nearly unanimous in reporting that, within the next 18 months, more than 50% of all business communication, IoT, and networking infrastructure will be stored and operated through some type of cloud system. This shift will affect how companies utilize procurement to both buy and sell products around the globe. As advanced automation continues to evolve, business will spend less on complex systems, have access to more options, and improve communication in the supply chain. Let’s take a closer look.
Cost Effective eProcurement Solutions
eProcurement technology vendors are shifting from large complex ERP-built technology in favor of simpler platforms that are user-ready and far more efficient than the previous setups. The latest wave of developments is more app-driven with simpler interfaces and analytics that are stored in the cloud rather than onboard external drives or mega-computers.
Thus, the cloud-based automation is more cost-effective and requires little to no maintenance. Business owners looking for enterprise procurement solutions that are budget-friendly can turn to cloud computing systems. You no longer have to have a six-figure budget to implement end-to-end eProcurement.
Components of Cloud Computing eProcurement
One of the concerns of buyers and suppliers on both ends of the supply chain is that cloud-based eProcurement platforms may also contain fewer essential components found in conventional software programs. Developers, however, have merely condensed all the same features into a more compact, low-cost system without eliminating the necessary elements. You’ll be able to utilize all the same features in the cloud such as:
- Spend Analysis. Cloud-based apps can collect, cleanse, classify, and analyze expenditure data to show you where you can reduce costs and improve the overall performance of the eProcurement process.
- RFQ. The key to eProcurement is efficiency and accuracy when requesting quotes or bids. Cloud computing can put all buyers and suppliers on the same page and allow everyone to view the necessary information during the RFQ process.
- Reverse Auction. Cloud-based apps offer reverse auction features that give buyers the leverage they need to drive purchase prices downward from suppliers.
- P.O. and Invoice Automation. Today’s buyers are more mobile than ever. Cloud-based technology allows you to send P.O. or invoices from any device. This speeds up the purchasing process and ensures that the supply chain is running smoothly.
- Contract Management. Cloud computing allows you to monitor past purchasing performance with any supplier so that you have negotiating power when drawing up future contracts. You and the supplier have on-demand reports that you can request directly from the cloud no matter where you are.
Seamless Integration Between Different Systems
One of the most common challenges in eProcurement is getting different systems to share data directly within the supply chain. There was no central location to upload or download documents, reports, and other vital information. Buyers and suppliers had to create multiple streams of communication to make, initiate, or finalize transactions.
Cloud-based systems solve this problem by centralizing all data and documents. They allow different types of procurement systems to communicate more efficiently using cloud connectivity and increase data visibility, sharing, and compliance. This setup solves a wide range of problems by:
- Reducing the number of upgrades any system may require to keep up with other systems.
- Reducing IT support costs to facilitate ongoing changes in the technology.
- Offering the ability to partner with a single provider that can handle all foreseeable problems such as data security, updates in cloud-based services, and managing the supply chain cloud.
- Providing faster data collection rates that require less effort.
Cloud Computing Improves Buyer-Seller Business Relationships
When utilized to its fullest potential, cloud computing keeps business relationships on solid ground by creating a non-disruptive supply chain as well as a more efficient flow of payments. It also gives buyers the ability to balance all transactions without creating problems in the business relationship.
“Buyers have an opportunity to extend their payment terms, which is very important in today’s market,” explains Oliver Belin, Business Development Executive at PrimeRevenue. “Working capital or cash is king today. To improve your cash flow, either you collect the money from your customers earlier, you manage your inventory better, or you pay your suppliers later. This is why procurement loves this type of solution because on the one side they can increase payment terms. On the other side, they improve their relationships because they allow their suppliers worldwide to get paid earlier.”
Companies Need to Prepare for the Cloud-Based Paradigm
Cloud-based technology is no longer a development on the fringe of procurement. Within the next five years, it is likely to become the standard platform for RFQ, reverse auctions, and other bidding practices. Companies on both sides of the supply chain need to understand the benefits and features of cloud computing and start making the transition into using the new technology as soon as possible. Doing so will continue giving them the leverage they need in procurement.
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