Digitalization in procurement is benefiting organizations—be it visibility, cost-effectiveness, scalability, or flexibility. However, with multiple systems and data points, extracting and analyzing that data for profitable decision-making becomes critical. This is what exactly an ERP or enterprise resource planning software does—unifying systems in a single user interface. But is the ERP agile enough to handle the complexities of the procurement process?
The key decision-makers often question whether they should invest in the procurement module of the existing ERP system or adopt a procurement platform. It comes as no surprise that the majority of businesses are using some kind of e-procurement solution. But does one size fit all?
Let us discover what an ERP is capable of and what ERP improvements can be made to add more value!
How Enterprise Resource Planning Software Support Businesses
ERP software integrates major business functions or operations into a single platform including supply chain management, human resources, finance, compliance, sales, marketing, and customer relationship management. Implementing an ERP helps improve core processes and thus support growth, reduce redundancy and errors, improve cost savings, and promote informed decision-making.
Here are some of the common benefits of ERP software to unify or centralize organizational systems.
- ERP software helps avoid operational and information silos and ensures seamless communication. Different teams get complete visibility of the business, strengthening business intelligence.
- Entering information in multiple systems is not only tedious but also redundant. ERP software funnels multiple data streams, avoiding the need to modify or update data manually and continuously.
- Since cloud-based ERP software provides a centralized place for all data, this makes it much easier for different departments to access data anytime, anywhere.
- It supports the automation and streamlining of back-office operations, improving the productivity of the team and workflows.
- With accurate data, ERP software strengthens financial planning and forecasting and enables real-time agile planning.
- It also offers better control over data security and data transfer, ensuring safe access and distribution of sensitive business information.
In some cases, ERP software has also improved the ability to negotiate prices by consolidating data from finance or procurement systems.
Is Your ERP Modern-Day Ready for Procurement Processes?
Although for many it may seem quite easy to use ERP software’ add-on procurement functionality, strategically it may not be a sound decision. Generally, ERP softwares has not been designed for procurement or even end-user. Their prime functionalities have been designed to support back-office personnel. That is why they are not adequate for handling complex procurement processes and also lack the flexibility or user experience to control costs.
You may wonder about customizations. Such customizations are quite costly and getting updates would again become a tedious affair. Such implementations often fail because the costs run more than what was anticipated, the duration is longer than expected, or the project does not deliver the expected results.
Here are some common drawbacks of add-on procurement functionality in ERP software.
- Steep costs: It may happen that some departments may not be directing their purchases through the procurement department. This means such departments may need ERP licenses which again is costly and may add to further issues such as handling complex ERP processes that require some training for non-finance professionals.
- Poor user experience: For any medium-sized organizations to large enterprises, if there are no policies or approval frameworks on spending for departments or individuals, situations can become tricky. This can become more problematic if the ERP add-on has a poor user experience as suppliers may sometimes misuse or not use the platform at all. It can result in tedious work for internal teams as they would spend most of their valuable time correcting these consequences.
- Finite functionality: The add-on procurement functionality in ERP software can be very limited in terms of spend management. Usually, they are not adequate if you are trying to simplify your purchase requisition process or approval workflows.
- Lack of flexibility and procurement analytics: Procurement processes require a high level of flexibility and that is where ERP software is not able to meet the mark. Every ERP is not equipped to provide the required transparency or handle complex spend allocations. This becomes important because spend analysis by category, department, requirement, suppliers, etc. is required to identify and secure cost-saving opportunities. Moreover, supplier relationship management is another such aspect that requires strategic insights into supplier performance, price variations, supplier diversity, analytics, and much more.
Choose a Procurement System that Offers Agility and Flexibility
The above points are definitely indicative of adopting a procurement solution that is not only cost-effective but also scalable. Cloud-based procurement solutions offer the accessibility that businesses need to manage modern-day supply chains. Such solutions or tools should also provide a framework for purchase decisions as well as cost control, regardless of where the team or department is operating from. This will enable you to overcome approval hurdles, delays, maverick spends, redundancies, and much more!
Organizations are leaning towards true-cloud procurement platforms that are offering improved RI and faster time to value. Moreover, these solutions are not only affordable but can complement or enhance the functionalities of your existing ERP, helping you avoid inflexible add-on modules or ERP plug-ins.
Here are some benefits of e-procurement platforms.
- A user-friendly interface that helps employees in managing the end-to-end purchase process.
- Complete visibility on purchases and spends that enable employees to identify areas of cost savings.
- Automation and streamlining of key aspects of a procurement process including contract management, sourcing, supplier relationship management, spend analysis, reconciliation, inventory management, and much more.
How to Add value to Your Existing ERP Software
Procurement integration with ERP is the solution! Integration of a procurement platform with your existing ERP can completely streamline your procure-to-pay process without the need for training your team on a new system. Moreover, the integration with ERP is rapid and seamless, supporting a seamless implementation.
Here is a look at what you get when integrating with a procurement solution like Induzbuy!
The key functionalities of a procurement tool when combined with the data-sharing capability of ERP can help create an environment that is supported by informed and data-driven decision-making.
E-procurement management solutions like Induzbuy can complement or enhance your existing ERP systems with the flexibility and agility that ERPs lack. With the automation of key P2P functionalities such as vendor management, inventory management, contract management, reconciliation, etc., you can expect higher ROI than ERP plug-ins.
To know more about how you can seamlessly integrate our intuitive procurement platform with your existing ERP system, get in touch with us today!