Over the last two years, the world faced unprecedented challenges that shook the stability of economies, global supply chains, healthcare systems, businesses and institutions and tinged the future with uncertainty. In a survey carried out in FY 2021, 72% of companies reported a negative impact on their supply chain, with more than 50% reporting severe disruptions. The foundation to cater to customers’ demands lies in a robust and well-oiled supply chain. A successful economic recovery depends on a resilient supply chain. The answer to this challenging situation was e-procurement.
E-procurement is a concept that has changed how businesses procure products and services. It uses a web-based system to digitize the whole procurement process, such as searching for suppliers, requesting product requirements, catalogs, quotations, tendering, auctions, negotiations, contracts, ordering, and payments. The entire process is conducted online and is entirely transparent and efficient.
Traditionally, the whole procurement process was cumbersome and tedious, not to mention highly complex and time-consuming. The industry benchmarks that most organizations lose 3-4% of their overall external spend on high transaction costs, inefficiency, and noncompliance.
E-procurement aims to eliminate these discrepancies and, in fact, succeeds in doing so to a Great extent. The ROI on a robust, automated end-to-end source-to-pay process is high.
Although the E-procurement process has been around for quite some time now, the pandemic accelerated the adoption of technology multifold in a short time. Advanced technologies
such as Artificial intelligence and automation make the entire procurement process efficient, fast, and error-free. E-procurement technology allows greater agility, responsiveness, and flexibility.
Impact of digitisation of procurement system
As per Markets & Markets Research, the market size of the procurement sector is expected to grow from USD 5.4 billion to USD 7.8 billion by 2024, at a CAGR f 7.6%. This indicates that there is a significant need among enterprises to reduce the costs associated with procurement operations and streamline procurement processes with automation.
E-pocurement adds to positive business gains due to its crucial role in the supply chain to seamlessly meet consumer demands. It helps companies to stay on top of their competitors.
There are some distinct advantages of E-procurement that have helped companies survive through difficult times –
- Cost savings: E-procurement platforms analyse the existing procurement processes, and streamline and improve them leading to significant cost savings. From finding the right vendors to negotiations, auctions, and payments, these platforms find the optimum routes to saving time and money.
- Digitisation: Digitization of enterprise data, especially those of transactions is now a mandate in all organizations. Apart from doing away with manual paper-based processes, enterprises can significantly reduce and in some cases eliminate human errors.
- Productivity: With the advancements in AI and ML, e-procurement platforms of today can eliminate manual repetitive tasks, thereby providing the procurement team with more bandwidth to focus on their core activities.
- Stronger relationships: Having a strong vendor ecosystem is necessary for maintaining a strong and resilient supply chain. Through chat-based communication, regular vendor updates, and transparency on payment information, e-procurement platforms facilitate vendor collaboration and help strengthen relationships.
- Visibility: Having visibility into your spending is crucial for any enterprise. E-procurement platforms can enable better data analysis by visualizing information in desired formats. With better visibility into their enterprises’ spending, leadership teams can make data-backed decisions.
- Compliance: With data-driven systems and logic-driven decisions, enterprises can ensure they remain fair to all their vendors and ensure compliance on all fronts. E-procurement platforms can also prompt early payments, ensure tax compliance, and are updated with GST data.
- Competitive edge: E-sourcing helps organizations find the right product at the right price from the right vendor thereby helping them save costs. This can provide a competitive edge to the buying team of any enterprise.
E-procurement the road to economic growth
A resilient supply chain and infrastructure security are essential for success in the post-pandemic world for the economies to be back on track. Preparedness empowers the industry, leading to a proactive reaction by the industry in the face of challenges. E-procurement is the future of supply chain, and adapting it will improve efficiency and cost-effectiveness.
It is not the strongest or the most intelligent who will survive but those who can best manage change — Charles Darwin
Views expressed above are the author’s own.
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