Despite evidence modern procurement methods deliver long-term added value and drive efficiencies, a large number of firms may be unwittingly exposing themselves to unnecessary risk because they do not have adequate visibility into their supply chain.
Whatever size of company you’re responsible for, or however you’re managing procurement, keeping a tight control on spending is essential. In turn, ensuring you have oversight of all purchases and a clear understanding of who is buying what, from whom, and why, is also crucial. All of a sudden procurement becomes a complex process.
Perhaps unsurprisingly, SMEs have been fairly slow adopters of e-procurement technology due to poor ease-of-use, the lack of integration with their core back-office solutions and the perceived hassle of setting up an established supplier network. But the demand for additional cost savings, tighter control over expenditure and increased spend visibility has placed a greater focus on integrated systems which seamlessly combine powerful spend management and e-procurement functionality, which can be hosted and accessed via the cloud.
Research from Science Warehouse, in association with eWorld Purchasing & Supply, confirmed organisations are placing authorised expenditure and contract compliance under greater scrutiny
. A survey of 263 senior business professionals in the manufacturing, pharmaceutical and public sectors revealed less than half of indirect spend is controlled in the majority of organisations. Some 55 per cent of those surveyed admitted their organisation has less than 40 per cent of spend financially controlled under management. In contrast, 76 per cent stated that cutting costs remains their top procurement priority for 2013 in order to achieve efficiency savings and greater financial security.
Integrated business systems are a great enabler for turning this vision into a reality, and more. By using spend management comparison tools, buyers are instantly able to see which suppliers are providing the best value. While savings will vary, research shows in most cases, up to 30 per cent cost reductions can be obtained based on a ‘basket analysis’ of the top 50 most commonly bought items.
Furthermore, by bringing together ERP, e-procurement and spend analysis applications, organisations can reduce their order processing costs by up to 80 per cent and gain a return on investment in less than six months by streamlining inefficient administration processes.
To take advantage when the upturn comes, it is vital businesses have greater insight into spend visibility and historical spending patterns in order to improve supplier efficiency, purchasing control and contract compliance. E-procurement technology not only hands you the keys to gain control of your purchasing, it also fuels the engine to aid better decision making so your business can compete and not get beat.
☛ Andrew Hayward is COO at m-hance