The advantages of e-procurement vs. traditional
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Makati City – September 2016 – Procurement is one of the most important business processes for many organizations, whether large enterprises or small and medium size companies. Many decisions taken by departments have a procurement implication that can impact on the overall cost of carrying out the decision. Here cost includes the total cost of the good or service and not simply the price that is paid.
In the private sector, procurement is viewed as a strategic function working to improve the organization’s profitability. Procurement is seen as helping to streamline processes, reduce raw material prices and costs, and identifying better sources of supply.
However, the process often pose many challenges such as understatement of purchase details, inappropriate selection methods, inadequate supplier information, selecting unsuitable supplier and risk in negotiations, just to name a few.
However, with the advent of technology, automation of the procurement process can now be done which can help achieve the best results for your procurement projects.
Below are just some of the values and additional advantages brought by technology in the procurement process that the traditional processes cannot provide.
1. Accelerated process time
With electronic procurement (e-procurement), companies can save time as its automated facility speeds up the internal process in terms of sourcing. Significantly, negotiation and getting the best price can be completed in just few clicks.
2. Easy access to more suppliers
E-procurement helps lessen the effort of organizations since it allows easy access to more suppliers, which opens more possibilities and options. Unlike the traditional process, this enables to connect with a wide-range of suppliers not just locally, but also globally.
3. Bids are placed in one interface
When the suppliers bid, it is done in one platform which can easily be accessed by the buyers and suppliers. Manual negotiations are minimized. There is complete transparency in negotiations.
4. Higher productivity
Since it automates the process, companies don’t have to spend so much effort and time when sourcing. The whole process is done electronically so the company can focus on other strategic tasks and function of their business.
5. Transparency in purchasing transactions
With the use of advance technology, documentation and communication become easier. This can ensure compliance between the contract and the actual procedure. Furthermore, transparency is necessary in sourcing to prevent corruption that may occur during transactions of both organizations.
Some companies already apply procurement compliance rules, but what makes e-procurement unique is the value it gives to the organizations as stated previously.
According to Pinky De Guzman-Alban, managing director and head of strategic initiatives of leading Procurement consulting firm, Consus–Third Pillar, aside from having a leading and robust platform, e-procurement service providers have vital roles in this matter.
Alban pointed out that it is critical for enterprises to choose the e-procurement solution and service provider that does not only offer a platform that automate the sourcing process, but also offers skills and expertise in the procurement process wherein the organization’s decision makers may be guided as to how they can maximize the advantages of the platform.
Other than the platform, the guidance of experts from Consus–Third Pillar is what guarantees their customers minimum savings of 4 to 14 percent on their annual spend, increase in productivity, better transparency in purchasing transactions and the overall improvement in bottom line numbers.
For instance, St. Luke’s Medical Center shared how they have been benefiting from e-procurement other than a significant increase in their bottom line savings.
“More than assurance in cost control, this advanced process helps us in obtaining the quality materials needed to ensure the safety of our patients,” said Ricardo Sison, vice president for supply chain division, St. Luke’s Medical Center. “Our team is satisfied with how Consus-Third Pillar entirely brought advantages to our operations and supply management through their vast database of suppliers and expertise in procurement decision-making.”
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