Organizations investing in procurement technologies today are looking to use these technological tools to make more value driven sourcing decisions, in a much faster way. These enterprises want to increase their productivity, enjoy visible day-to-day transactions and make it easier for users to get the supplies that they need. Below is a look at some of the key benefits of utilizing procurement technology in a business.
It is possible to decrease rising business costs through the leveraging of volume. This process requires the structuring of supplier relationships, combined with the use of system improvements for decreaseing external spending, while improving supplier performance and quality. Procurement technology also allows the business to decrease incidences of error, rework and paperwork in general.
Through the centralized tracking of transactions, a business is able to enjoy the many advantages of full reporting on requisitions, order processes, purchased items and payments made. The advantages of technology in procurement extend to ensuring compliance with established and existing contracts.
Technology allows internal customers to get the items that they need from a catalogue of approved items, through an online system for requisition and placing orders. Procurement staff is thereby no longer responsible for the task of having to process orders and handle low value transactions. Instead, they are able to concentrate on improving relationships with suppliers through strategic sourcing.
Through formal, standardised workflows and approval processes, the right level of authorization is applied to every transaction. Moreover, spending is targeted towards meeting the requirements of existing contracts. There is improved policy compliance as users are now able to find products and services fast from their preferred suppliers, which reduces incidences of maverick purchases.
The advantages of procurement technology can only be fully realized once the processes and systems for its management have been set up. Software tools are needed to create standard procurement documentation such as electronic requests for proposal, information and quotation. These methods have been proven as being effective for sourcing products and developing framework agreements that offer the most attractive prices.
For overall success, a business will need an adequate and fully integrated technology approach. Additional programs offer a framework for spend management and the supplier databases. These programs also host important vendor information, and serve as an electronic contract repository. Because all these systems cost money, a clear business case needs to be made for procurement technology.