What we see is that indirect procurement creates real challenges for organizations today. Managing information, supplier catalogs, spend data and supplier evaluation are all current challenges that impact the organization’s ability to provide an efficient epurchasing process internally – and engage with suppliers externally during onboarding or sourcing events.
Collaboration between buyers and suppliers appears to be quite weak, perhaps most evident in the lack of catalogs provided by key suppliers. Complexity is clearly an issue with many in the survey giving evidence of manually maintained information, out of date information, free text ordering rather than catalog based purchasing, etc. I see this issue around managing complexity as highly interesting. It’s interesting because eProcurement has to do two things: manage complexity and present ease of use. These two things are a summary of what a vendor (like OpusCapita and others) endeavors to provide when working with an organization looking to improve their purchasing process; an Amazon-like user experience with all the information available, up-to-date and informative to the buying process. If the information is available to guide buying behavior, requisitioners will find it easier to get what they need, category managers will be able to better manage their categories and with less maverick buying, less free texting and more catalogs we begin to see more on-contract spend, managed spend and cost reduction.
Cost reduction was by far the most important single KPI and while this doesn’t surprise me greatly, it does make me view some of the responses from a perspective of ‘poor = costly’. I think Procurement (the department) has an opportunity to do more however. Cutting costs or cost reduction is such a commoditized view of what Procurement really could do strategically for the organization.
Effective eprocurement plays a central role in sourcing, contract negotiation and, the implementation of terms which could include conditions for e-catalogs, reception of e-orders and sending of e-invoices. Procurement could also drive the supplier engagement effort around SCF programs. More and more, leading organizations are looking directly to their suppliers for collaboration (partnership even) specifically to improve processes, reduce costs and tighten supply chains. So while cost reduction is a great measure of success, I think we don’t want to lose sight of the leadership role procurement plays in the broader source-to-pay process.
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Until next time,
Rowan Lemley has over 10 years of experience in the purchase-to-pay arena. During that time, he has lead product marketing for AP Automation, B2B networks, and most recently eProcurement and Product Information Management solutions.