Lower transaction prices and vastly shorter requisition-to-order times? Good news: It can be done. The key to pulling off these two feats is to move into e-procurement efforts.

e-procurement is much like it sounds — using the online world to execute your procurement duties. Sure, maybe you say, we looked into this in the past and weren’t impressed with what was available. As you know, though, times change and technology improves. That’s why it might be worth giving e-procurement a new look.

By reducing many of the hands-on elements of the procurement process, you’ll immediately reduce the risk of introducing human error into counts and calculations. That’s just the first benefit.

Now, the stats are rolling in - such as a recent study by Aberdeen Group — that substantiate the advantages that e-procurement can bring to virtually any procurement process.

It’s hard to argue with these numbers:

• Requisition-to-order costs: $69 before e-procurement, $35 after its implementation.
• Requisition-to-order cycle: 15.5 days before e-procurement, 3.1 days afterward.

Who’s going to argue if you’re streamlining the cost of transition of orders from the ordering location to the vendor, by nearly 50%? Slicing more than 12 days from the time it takes your requisition to hit the streets as an order is an incredible achievement.

There are steps you can begin to take now — baby steps — to kick off the process:

• Talk to your suppliers and ask if they’re capable of being part of an e-procurement system
• Talk to your own IT department about your company’s capacity to handle electronic purchase orders.

Many procurement operations already can handle electronic purchase orders, on a limited scale. Perhaps for you, this is the opportunity to demonstrate its value and efficiency on a larger scale.

Source: AberdeenGroup, March 2008

Tags: human error, procurement, technology