The Advantages of using Procurement Technology
A range of industries are talking about using technology to improve their supply chain processes This is because technology can significantly impact an organization’s bottom-line by improving visibility and cost-efficiency. Technology also helps increase the productivity of an organization. Applying technology to the critical area of Sourcing & Procurement will have exponentially increased the benefits. Increasingly, technology is being seen as a key metric when it comes to measuring the maturity of procurement organizations. The following points elaborate the advantages of procurement technology.
- Improved spend visibility
Procurement technology centralizes the tracking of spend. By structuring the spend across suppliers, it helps the buyer leverage volumes and reduce costs. Organizations can also track cost reductions continuously. This results in higher savings. With procurement technology, vendor SLAs can be tracked. The organization is better equipped to manage risk, keep track of supplier scorecards and ensure contract compliance. Additional savings can be realized.
- Increase in Accuracy of Data
When the procurement process is digitalized, it streamlines the entire process. The chances for data errors are reduced. A whole repository of documents is available online which makes it easy to refer to previous orders and helps in ensuring contract compliance. Digitalization also contributes to transparency – one can track user actions ( who placed a requisition, who approved the purchase order) and view when orders were placed with the vendor. Technology ensures data integrity and user accountability. In short, one data set becomes the single source of truth and can be relied upon by all the stakeholders involved.
- Improves Operational Efficiency
When the procurement process is conducted manually, a lot of time is spent in communicating individually with each potential supplier, gathering all the replies and quotations from each of these suppliers, manually compiling the negotiation history, drawing up and reworking contracts. With digital technology, all communications happen online and simultaneously, within the context for every one of the 1000’s of parts in sourcing, order templates are available and purchase approvals can be done online. The templates for contracts are reusable. This helps expedite the procurement process faster and the transaction time is reduced.
- Increased Collaboration
With technology, cross functional flow of information is easily enabled. This in turn helps the teams involved to develop solutions for suppliers and other stakeholders involved. Thus, information asymmetries are eliminated. A collaborative data platform which hosts contract records and key metrics paves the way for transparent and aligned decision making. Cost savings can be calculated definitively based on the data.
- Handling critical Exceptions:
Since all the information is in one place, organizations can work without any concern of retrospective and future cost changes, Credit & Debit for mis-matched and rejected quantities, supplemental invoices etc.
- Standardized Workflows
Digital Technology helps reduce deviations in the procurement process. Technology ensures transactions go through the right channel and have the correct level of approval. By ensuring this, technology helps prevent off-contract purchases as all orders have to go through the system.
- Global procurement
An application for procurement which is Internet-based helps the buyers connect to suppliers worldwide. This gives the buyer a wide range of options to choose from. By supporting various currencies, languages and logistics options, the organization can easily source from anywhere in the world.
Digital Technology thus makes the whole process more robust and seamless. By providing a clean source of data, it helps towards automating several workflows. Digitalization once completed, will set the organizations for the next level of world-class competitiveness by automating processes and implementing AI to support the procurement team in highly complex decisions for maximum saving.