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Best Practices in e-Procurement
Save money and increase available staff time
by implementing Mercury Commerce Procurement Automation Solutions
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Mercury Commerce Solutions has sponsored research into Best Practices in Electronic Procurement, the use of Procurement Process Automation to save time and money. Our research
shows that the goal of Procurement Process Automation is to overcome the six “Points of Pain” that traditional systems (including those that incorporate online shopping) inflict upon their users.
These “Points of Pain” relentlessly and inexorably deplete funds, resources, energy and morale. These factors can prevent an organization from truly achieving the promise of electronic procurement solutions.
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Why you need Procurement Process Automation
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1. Transaction Costs — It’s estimated that labor-intensive, paper-excessive procurement processes can cost organizations more than $100 per order in time and resources—a figure that’s often higher than what the ordered item costs!
2. Wasted Effort — Paper-based requisition, purchase and approval processes cause redundancy of effort, promote errors, and inevitably result in costly, frustrating delays.
3. Inefficient Management — Because they lack real-time data, administrators have no way of accurately budgeting and auditing their resources. Nor can they implement an effective overall purchasing strategy.
4. Lost Savings Opportunities — Traditional procurement environments are a breeding ground for “maverick” or “rogue” buying which, according to one study, can account for a 30 to 45 percent increase in overall procurement costs. The purchase of unnecessary or non-contract items in violation of business rules occurs routinely, sabotaging whatever efforts have been taken to save money through volume discounts, preferred vendor lists, and vendor bidding. It’s also difficult for organizations to leverage standard operating procedures for contract utilization. And manual warehouse inventory, because it’s not clearly visible, is never fully exploited, nor can it be easily adjusted to meet the organization’s needs.
5. Misallocation of Resources — The costs are impossible to quantify, but no one doubts that the time and energy employees spend procuring supplies would ideally be better spent with on productive business. In our study, author Max McKeown defines the goal of procurement automation with almost the same words we might use to define business goals. The goal, he says, is to allow people “to grow strong and independent in pursuit of the fulfillment that comes from serving other people.”
6. Depletion of Energy and Morale — Bogged down by paperwork, requisitioners, administrators and business managers who find themselves performing redundant, distracting and potentially demoralizing work can eventually fall prey to resignation—an emotional if not physical leave-taking—characterized by lack of vitality, even apathy.
Download our free White Paper:
Best Practices in Electronic Procurement
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Best Practices in e-Procurement
