How can you slash costs in half and cut the purchasing cycle from 15 days to 3 days? E-procurement.

Public sector businesses reaped enviable gains by implementing e-procurement systems, according to a recent Aberdeen Group research report.

What were some of the conditions that pushed companies in this direction? The main factors driving the move to e-procurement included:

• Address inefficiencies in the requisition-until-pay process — 63%
• Reduce transaction costs — 47%
• Improve compliance with certain standards — 43%
• Increase visibility into overall procurement processes — 23%

There’s another bonus to adopting e-procurement, the report concluded. With less manual processing there’s a noticeable drop-off in errors that often occur in repetitive tasks. This frees staffers to tackle more pressing, “big picture” problems.

In addition, automating the process can significantly reduce the requisition-to-order cycle process.

The Aberdeen Group report also highlighted significant benchmarks achieved before and after companies implemented e-procurement processes:

• requisition-to-order costs: from $69 to $35
• requisition-to-order cycles: 15.5 days to 3.1 days
• percentage of “off-contract” spend: 38% to 22%

There are three essential elements you need to have in place in order to begin implementing e-procurement capabilities:

• One person with the power to reach across the various departments of your company. Since successful e-procurement requires across-the-board cooperation from so many different people in your company, it’s important to have someone vested with the necessary influence.
• The ability for your company to enable electronic purchase orders. This creates a universal element in all purchases being submitted, and greatly reduces the errors that manual purchase ordering can create.
• Getting suppliers on board. e-procurement is a two-way street. In order to work effectively with your customers, you need your own suppliers and vendors “speaking the same language” as you are, to minimize confusion and miscommunication.

Tags: cost, cycles, orders, procurement, requisition