Home Blog eProcurement As A Cost Reduction Strategy

eProcurement As A Cost Reduction Strategy

by Eyvo

eProcurement As A Cost Reduction Strategy

eProcurement: Cost Reduction Strategy

In today’s business world, cost reduction is one of the major goals amongst the decision makers of the companies. This holds true especially in the area of eprocurement.

Category managers, purchasing managers and CFOs design and initiate strategies to fulfill their goals of cost reduction. Reducing cost is not as easy as it seems, numerous companies have tried and failed.

The process of purchasing nowadays is almost same in all the business irrespective of the industry, location or size of the company. Using paper requisitions with the process of manual approval can result in the organization spending more on every order they process. If a company is processing thousands of orders annually, this can cost them a huge sum of money.

Fortunately, there is an area which offers cost reduction benefit and a quick investment return i.e. e-procurement. Operational budgets are the focus of procurement activities for spending directly which maintains the business costs. Normally, the activities connected to purchasing include the process which is paper based and manual. This process had been initiated years ago which is now resulting in lost productivity and an increase in cost.

Here are a few ways you can reduce cost and save time through e-procurement:

Utilize templates at the RFI stage ; this will ensure that your suppliers are asked specific standard questions with the information being included in your data base in the company’s desired format. The suppliers would be required to put everything in the same way so that their order goes through the system. This in turn will save time for the buyers and allow them to conduct accurate and quick analysis.

Through eprocurement, the RFQ can be arranged in such a method that will clear any doubts on the supplier’s end. You can enable prompts that ask the suppliers specific terms and options. This will enable the buyers to easily locate the vendors offering the best price.

By using an eprocurement system, you can easily gather the information you want and analyze it. For example, making a top 10 vendors list can become easy when you can go through the options you have enabled your vendors to choose from.

For example, you can enable the e-auction option. This allows the suppliers to bid against one another and save money on supplies. E-auction is a best option when supply outpaces demand.

Start initiating data generation through the e-procurement system. This will enable you to design ‘what ifs’ situations which will utilized for more effective and beneficial purchasing decisions. Several of the e-procurement programs have multiple currency and multilingual options that supports and allows global purchasing. This saves both the energy and time of the buyers.

Cost-reduction is one of the top most priorities of many businesses. Numerous organizations look for ways to strategies to reduce cost in the respective areas. The best way to initiate cost reduction strategy is to migrate to e-procurement option. This can benefit your company in a number of ways. Though, it may take a few weeks time for the proper implementation of e-procurement but in the long run, it will do wonders for your business by decreasing the cost and increasing the profits.