E-procurement initiatives are about achieving reach, speed and control in requisitioning and approval processes, but those three things cannot be achieved with manual processes. The key objective is to erase inefficiencies from processes so it is easier and faster for everyone involved to do what you want them to do.
Because many companies, especially in the mid-market, lack full-time purchasing agents or departments, all of their procurement activities are distributed among operational departments where individuals undertake purchasing as part of another role, for example in facilities management or IT. Where this is necessary, real benefits can be achieved by implementing an e-procurement solution with a common repository of suppliers and a fast, online requisitioning and approval workflow process.
The challenge is that when companies get that repository, they feel comfortable that they have achieved the full promise of e-procurement – but in truth they are leaving some benefits on the table. Without an aggressive, centralised purchasing department, there isn’t a corporate champion to take it to the next level of the
This devolution means that the implementation of spend analytics or procurement business intelligence falls victim to a view that procurement is working at a departmental level. Departments across the organisation are basically getting what they need in terms of an efficient search, select, shop and submit process, so they don’t come together to lobby for procurement business intelligence. As long as each gets what they need within their departmental budgets, they think everything is fine.
What’s missing, of course, is a broader and deeper analysis of spending that would bring to light supplier redundancies, high-volume item pricing opportunities and possibilities for negotiating better discounts, terms and service levels from incumbent and potential suppliers.
This is the real promise of e-procurement once the information in repositories is properly analysed and interrogated. Business intelligence in procurement is a window on to the suppliers, items, prices, volumes and approval processes that can highlight great opportunities for further improvement.
What’s holding some companies back is not technical, it’s organisational. Sometimes these features exist in the software that they already use, but utilising procurement business intelligence will be an untapped mine of opportunity until someone in centralised purchasing or finance champions its use across the enterprise.
☛ Scott Hays is a product marketing director at Epicor