'Inefficient procurement tools costing North American firms $1.5 billion'

Will Green is news editor of Supply Management
24 September 2014

Inefficient procurement tools are costing businesses in the US and Canada more than $1.5 billion (£914 million) each year, according to a report.

The figure was arrived at following a survey by Topline Strategy Group, sponsored by SciQuest, which found that only just over a quarter of respondents said their software system made them more productive.

The survey found a better system would save 72 per cent of respondents an average of almost 3.2 hours per worker per week or 158 hours a year. When this figure is multiplied by 204,000, which is 72 per cent of the 284,000 North American procurement professionals in companies of 500 employees or more, it equals more than 32 million working hours.

The report said after taking labour costs of $45 (£27) an hour into account, this translated into costs of $1.5 billion a year.

The survey, of 241 sourcing and finance professionals at more than 200 firms, also found 68 per cent of respondents who said their procurement systems did not make them more productive would use the time lost to inefficiency to find more savings.

“They would use also use that time to guide purchasers on making better choices, to get more spend categories under contract, purchase more cost-effective items and get more bids per tender,” said the report.

Mark Digman, senior vice president of marketing at SciQuest, said: “When sourced and implemented correctly, procurement systems represent an opportunity for organisations to drastically reduce costs, improve process efficiency and gain visibility into spending decisions.”

The report advises firms:

1.     Choose the right software

2.     Don’t get caught up in vendor standardisation

3.     Invest in implementation

4.     Frequently update and improve the system

5.     Use software that is easy for casual, occasional users

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