Procurement is a critical strategic activity in businesses. With increasing market volatility, stricter regulations, and geopolitical conditions, procurement teams are vying hard to keep costs down whilst ensuring the procurement process is transparent, controlled, and efficient. With that being said, legacy ERP systems or spreadsheets are not well equipped to handle these complexities. That is why an e-procurement solution is becoming a standard and not just an option.
Procurement software offers many advantages in digital procurement transformation but cost saving remains the main reason. Let us scoop more details on how e-procurement software can help you reduce procurement costs!
What Exactly Does an E-Procurement Solution Do?
E-procurement or electronic procurement system connects buyers, sellers, and other procurement stakeholders digitally using the internet, automating various procurement processes such as ordering, requisition, purchasing, spend management, contract and supplier management, and much more.
Such integrated solutions not only establish two-way communication between buyers and suppliers but also drive flexibility, cost saving, scalability, and productivity. Some of the unique benefits of e-procurement software include the following:
- Strengthen supplier relationships
- Mitigate procurement risks and supply chain disruptions
- Streamline approval workflows
- Capture good deals and discounts in bulk buying or high volumes
- Optimize spending by avoiding maverick spend or dark purchasing
- Negotiate contracts
- Avoid payment delays and duplicate purchases
- Support strategic, data-driven decision-making
- Improve supplier base, reliability and performance
How E-Procurement Software Helps Reduce Procurement Costs
Cost reduction remains a primary concern as well as a key performance indicator of procurement teams. As e-procurement solutions pave the way for the digital transformation of procurement processes, many organizations have been successfully cutting down costs with these integrated solutions. Let us understand how.
#1 Expedites purchase approval workflow
Inefficient, manual approval processes can slow down procurement and overlook price drops. Moreover, back-and-forth emails and spreadsheets are prone to human errors and misjudgments. Especially when more people are involved, there is a high chance of bypassing policies and doing things their own way to reduce the procurement cycle.
E-procurement solutions help you manage purchase risks by ensuring accountability, protection of sensitive information, and hierarchy access to different stakeholders. Plus, it guarantees a transparent purchasing process after appropriate approvals at all steps.
#2 Controls purchasing and maverick spend
Complete visibility is required in purchase requests to not only help you evaluate your requirements but also manage spends. For instance, purchase controls such as holding off a purchase request if it goes above a certain threshold amount can help you analyze where you are spending additional budget and if it’s necessary. This can help you identify the cost-cutting opportunities and reduce unapproved maverick spends.
#3 Supports budgeting and tracks real-time costs
Budgeting is a crucial aspect of any procurement process. Many organizations rely on spreadsheets, legacy systems, or manual calculations for estimating the budget. E-procurement software on the other hand automates these calculations and keeps authorized stakeholders updated on the available budget as well as future spends. Some software also send notifications on over budgeting and showcase budget breakdown based on the requirements or projects, making your budget accounting more accurate and flexible and helping reduce financial losses.
#4 Assists in bulk purchases
Bulk purchases can benefit businesses by offloading inventory and streamlining operations (avoid disruptions due to unforeseen events). Even strategising on extended periods or long-term service contracts can prove useful in cutting down costs. Plus, it helps you lock in high-volume buying discounts!
#5 Avoids duplicate purchases
E-procurement software offers visibility over all purchases, making tracking, pre-approval checks, and final approvals easier. These systems also support centralized documentation and effective communication which help limit or avoid the issues related to duplicate purchasing, right in the initial stages of the process.
#6 Streamlines contract review and renewal
Contracts can be tricky. With much to read between the lines, auto-renewals are not always the best way forward. Especially, when managing hundreds of supplier contracts, a small miss can cost you significant money.
This is where an e-procurement system with contract management features can prove useful. You can access your contracts digitally, giving you increased visibility and access. It, thus, helps your team to review contract details quickly and effectively. Moreover, with notifications for contract review or renewal before the expiry date, you can reduce the risk of contract rollovers.
#7 Makes bid comparison easier
When suppliers submit bids in different formats, then it may get cumbersome to compare bids. With an e-procurement system, you can standardize your bid entry screens and then the system can compare the bids based on pre-decided factors such as price, quality, lead time, etc. using AI-based tools, helping you choose the best bid.
#8 Manages suppliers relations for better deals
Having a mutually beneficial relationship with suppliers is key to a successful procurement cycle. Aligning your goals with that of the supplier can help you negotiate better contracts and also improve cost savings. Without the right tools, it can get difficult.
An e-procurement solution with supplier relationship management can help you categorize and rate your suppliers so that you don’t waste money and time on the wrong ones.
#9 Simplifies e-tenders
E-procurement systems ensure a transparent e-tender submission from suppliers. Like other automated functionalities, e-tenders make it easier to create and modify documents, give confidence to the suppliers, and help determine relevant tenders based on the responses submitted by the suppliers and the predetermined criteria.
With multiple tenders running, you get to secure more cost savings.
Digital procurement can be the first step if you’re looking to transform your procurement process. Adopting e-procurement solutions can offer a plethora of benefits with cost-saving being the top reason for procurement managers. It not only eliminates duplicate purchases but also avoids maverick spends, manages the budget, reduces errors due to paper-based systems, secures high volume buying discounts and much more!
Induzbuy, an emerging procurement management solution for buyers and suppliers offer an end-to-end integrated digital process. It automates and streamlines various key processes including contract and vendor management, reconciliation, order management, and much more so you can focus on the bigger picture.
To get started with your cost-saving efforts, contact us today!