downstream procurement pressures

How can eProcurement software help with downstream pressures?

In our last blog we talked about our recent research, where we spoke to over 250 procurement professionals to understand the triggers that lead their organisation to invest in professional procurement, and in particular their upstream procurement pressures. This week we’re looking at the other end of the spectrum – downstream procurement. So here we’re talking about the day to day, operational buying activities, and the subsequent management of the supply and payment processes.

Defining downstream procurement pressures

When it came to downstream procurement, the problems seemed to stem from a disparate supply chain that had become too difficult to manage. The research pointed to a lack of visibility across employees’ buying activities, where buyers were often making buying decisions without complying to any rules or guidelines, causing maverick spend to shoot sky high and become out of control.

Other than uncontrolled buying and off contract spend, operational processes such as invoice payments were found to be problematic as well, with many saying that manual processes were costly, time consuming and highly prone to error and query. For the organisations without the correct technology and tools, finance teams were spending way too much time firefighting, with no time left to work on any value-adding tasks. Plus this was creating a knock-on effect to the entire supply chain, causing cashflow problem, project delays and eventually unhappy customers.

Our research showed that:

 

How eprocurement software can help

eProcurement software, such a Purchase to Pay (P2P) system, allows your employees to buy from a list of pre-approved suppliers and place orders via an easy to use, centralised portal. Because of the guided buying experience found within most of today’s portals, you can almost always ensure that employees are buying the right goods and services from the right suppliers, and at the right price. With the simplified ordering process, you can have better control and transparency over each transaction and see your maverick spend drop.

Another advantage of having a P2P solution is the automation of your procurement processes – from the requisition of goods and services, all the way to the receipt and payment stage. Imagine this, when a PO is raised, purchase requests are correctly coded, budgets are automatically checked and updated before being routed to the right person for approval. Suppliers are sending you invoices the right way, which are then matched and sent straight to your finance system for payment. This is what you can achieve with a P2P system – a completely touchless process for your entire organisation.

If you would like to discuss anything covered in this blog please contact us and we will be happy to answer any questions or discuss any of your procurement needs.