Key Drivers of Electronic Procurement Process

In the last few years the role of procurement has changes dramatically. Companies are aiming to gain tighter control over supplier’s performance to increase efficiencies and maximize growth and profits. There is a shift from decentralized to centralized models in an effort to tighten controls, standardize processes, and provide the needed negotiating power with vendors. Various organizations are responding to these demands by integrating electronic procurement tools that support various key procurement processes.

Many organizations are adopting electronic procurement automation solutions as the advantages of these tools become more evident. The organizations that implement these solutions are garnering results by effectively managing and collaborating with their supplier base, meeting and exceeding savings targets, strictly enforcing contract compliance and streamlining the overall procurement process. Organizations can automate all or part of the purchase to pay process to gain the following advantages:

Visibility Across All Transactions

Purchase to Pay or Procure to Pay automation provides real time, accurate data due to visibility and transparency across all transactions for both buyers and suppliers. The number one benefit of P2P automation is the improved visibility (PayStream Advisors, Electronic Procurement, 2013). Visibility across all transactions facilitates transaction research, discrepancy resolution, and reduces supplier inquiries by providing buyers and suppliers access to the same information.

Optimizing the Procurement Process

Automation solutions contribute to processing efficiency by removing paper from the equation. When a buyer orders from an online catalogue, an organization can review and approve the purchase electronically with workflow tools and suppliers are informed electronically. A survey conducted by PayStream reveals that streamlined requisition and procurement processes rank as a top reason organizations implemented a procurement automation solution (PayStream Advisors, Electronic Procurement, 2013).

Cost Reduction

Since Purchase-to-Pay automation significantly reduces the amount of paper used it decreases the time it takes to process purchase orders, invoices and payments. This helps organizations save billions of dollars that are spend in the process. Furthermore, it equips organizations to spend less and ultimately save proportionately. Cost control over maverick spend was cited as one of the primary benefits of adopting P2P automation solutions by responding companies in the survey (PayStream Advisors, Electronic Procurement, 2013).

Faster Approval Cycles

Reducing the number of days it takes to approve and pay invoices leads to a significant reduction in late payment penalties, which works to increase the number of supplier discounts an organization can capture. Paying suppliers on-time improves supplier relationships, which in turn makes it easier for organizations to renegotiate contracts and strike more favourable agreements with key vendors.

Therefore, it’s no surprise that more and more organizations are trying to recognize the shortcomings in their financial supply chain and exploring innovative ways to leverage P2P automation solutions. An organization that provides various financial solutions including procure to pay solutions is Basware. More information can be found on their website.

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