Online procurement or e-procurement is a web-based procurement management system that accelerates and automates the procure-to-pay cycle. It is gaining wider adoption as organizations see the benefits of shorter procurement cycles, increased visibility into spending, and a streamlined procurement process.
One of the most important goals of a procurement division within an organization has to be optimize spending. The procurement division might not generate profits for the company but can significantly impact the bottom line by effectively managing the spending and cutting costs. Here are a few ways how:
Accurate, real-time data: Online procurement software provides accurate, real-time data at all times. It gives managers complete visibility over spending and they can take immediate action if any discrepancies arise.
Analyze data to make more informed decisions. Data by itself is not of much help. This software comes with an integrated analytics solution that helps you crunch the numbers and create dashboards and charts to give you a clear overview of the whole process. You will now know which department is overspending and which department is underspending; using this information, you can accurately forecast budgets for the future. You can also analyze suppliers to pick the best option.
Save on paper and telephone expenses: Traditionally, the procurement process involved paper flowing from department to department and the approver receiving multiple calls about POs, estimates, and invoices. Software automates many parts of the process, which means that you can now save on all these costs.
Reverse auction to keep suppliers on their toes: An online reverse auction is a process which helps organizations procure supplies at lowest prices. Here, buyers take on the role of sellers and issue the list of items they need to procure. Sellers bid for the order, and as this process is highly competitive, it encourages them to reduce prices to win the bid.
As we can see, procurement impacts the bottom line directly or indirectly, but significantly. What are the other ways? Let us know!