Digital transformation is still the talk of the town, and organizations have no way to avoid it. Businesses that fail to adapt are doomed to fail. Financial institutions will perish, for instance, if they ignore the need to transform. Companies, therefore, should take steps to create a solid foundation for the digital age.
The procure-to-pay process, with electronic procurement as the main element, is an essential building block for that solid basis. E-procurement solutions, such as ServiceNow procurement apps, allow procurement professionals to communicate information efficiently and easily. These solutions also automate the supply chain, procurement, and other related internal processes without compromising on standards and quality.
Businesses, therefore, should prioritize electronic procurement for the digital transformation of their organization. By doing so, they stand to gain the following benefits:
Quick Return on Investment (ROI)
Results of a survey published in Information Age revealed that the use of e-procurement could exceed the initial cost of products by 720 percent. Electronic procurement, in practice, does bring about a faster ROI when compared to conventional methods, such as expanding manufacturing equipment and investing in modernizing machinery. The monetary and operational effects of procurement automation and digitalization lead to a quicker amortization of costs at an early stage and offer more transparency for the entire process.
Noticeable Decreases in Costs
Costs, from a process perspective, are a decisive factor in calculating ROI. Practical experience has revealed that an e-procurement solution shows impactful reductions in cost within six to eight months. A company that has 200,000 order processes per year, for instance, can enjoy an estimated annual savings of five percent on purchase costs thanks to the introduction of automation and standardization.
Better Buying Decisions
Best price should not be the only factor to consider when it comes to procurement. Some businesses have discovered that those who focus solely on price could end up shelling out more money once they consider other variables, such as quality and delivery. With a digital procurement process, however, you can review all the information side by side to spot gaps in the proposals quickly. This allows your company to optimize its decisions and prevents maverick buying, a term that describes a person making purchases independently without adhering to standard procedure.
E-procurement optimizes the purchasing processes, so there’s less work for you and your procurement team to do. It offers many benefits. First, it gets rid of some of the mundane tasks of your team. It allows you to assign complex tasks that add real value to the organization.
Additionally, your e-procurement software can automatically complete tasks that used to take hours. When a report, for instance, you can use the program to generate what you need in seconds.
When you do procurement manually, you’re unable to see all the info you need to make a well-informed decision. With e-procurement, however, you see all the required data in a standard format. This provides you with control when you need it. This control also enables you to comply with strict procurement compliance rules required by international, national, or local laws.
Organizations that put electronic procurement on top of their priority list can enjoy quick ROI, lower costs, better purchasing decisions, streamlined processes, and more control. Procurement employees who still follow the manual or traditional purchase-to-pay processes can highlight these advantages when you make a project proposal to drive digitalization in your company.