ERPs vs E-Procurement Tools: Benefits of New-Age, Intelligent Software

The COVID-19 pandemic and lockdown restrictions wreaked havoc on the supply chain worldwide, helping businesses realise the importance of digital transformation. Businesses now focus on digitization to keep up with the dynamic demands. Does your management push the ERP solution for the procurement process too? As a procurement leader, your job is to identify the right procurement solution for your organisation, and the ERP procurement module is insufficient. Both e-procurement and ERP help increase productivity by automating business processes. However, a dedicated procurement solution offers more flexibility for the procurement process.

Why Can’t ERP Modules Handle Dynamic Procurement Demands?

When Mckinsey reviewed the history of how companies recovered from the 2008 global crisis, it uncovered that companies that employed high-performing procurement functions were able to recover much more quickly. Enterprise-wide ERP systems are popular for streamlining many business operations. Many organisations still use ERP solutions for most business processes as it was the only known way to adopt digitization. The finance and IT department are usually happy implementing an ERP solution. However, the harsh reality is that ERP modules offer little to no benefits to the procurement system.

• Long implementation times to develop ERP procurement models because ERP solutions are mostly finance-based
• ERP solutions tend to get expensive as more functionality has to be added for procurement
• ERP procurement modules are not easy to use and lack end-to-end visibility of the process, especially for complex and dynamic procurement processes
• ERP modules fail to control maverick spend
• ERP procurement modules lack a collaborative environment where the procurement team must constantly communicate with the suppliers
• ERP data models are not designed for procurement and can’t give deep analytics about the spend data
• ERP focuses on operational procurement and doesn’t support strategic procurement

How Does E-Procurement Support Agility In The Procurement Process?

Dedicated e-procurement solutions are developed to streamline and automate procurement workflows. According to a recent Deloitte study, organisations can reduce operation costs by 60% with e-procurement. In addition, there can be a 50% improvement in realising multiple discounts with suppliers. Dedicated procurement solutions are developed to be a single platform to carry out all types of procurement tasks. There is no need to switch between multiple spreadsheets and manually enter supplier information to complete a purchase order. Handling various email clients to interact with different suppliers is no longer necessary. The e-procurement environment brings the entire procurement team under one roof to carry out all procurement tasks by onboarding suppliers directly to the platform.

Source: Mckinsey

Following are the benefits of choosing e-procurement over ERP:

1. Quick Implementation

Procurement software implementation is quick and straightforward. You can customise the software and integrate it with the existing ERP to access the standard databases. Many cloud-based procurement solutions don’t even require you to download any software. Instead, you can access the procurement platform directly.

2. Cost-Effective Solution

A comprehensive procurement solution has all the necessary functionalities to automate the procurement process. E-procurement benefits can be enjoyed right from the moment it is deployed. Within two to three months, organisations can realise the ROI of using e-procurement. Unlike ERP modules, you don’t have to spend for each module to add more functionality. The procurement system is preloaded with all features you need for digital procurement, including e-auctioning, e-sourcing, e-ordering, e-tendering, eRFX, and more.

3. Flexible & Scalable

The dedicated procurement solution is designed to handle the dynamic changes in the procurement process. You can always make the best purchasing decision based on the current procurement needs. While implementing standardisation of the procurement processes, e-procurement allows flexibility for strategic procurement. You can customise the procurement system to the needs of your business. The procurement solution will be ready to handle the overload when your business scales up rapidly.

4. Increased Cost Savings

Immediately after implementing e-procurement, your organisation can enjoy better cost savings with automated purchase order and non-purchase order spending. You can reduce maverick expenditures by making it easier to create purchase orders. The purchase process can be expedited with automated approval workflows. Your procurement team can focus on innovation because manual data entry will not be required.

5. Improved Spend Visibility

One of the biggest benefits of e-procurement is improved spend visibility. The purchase process becomes transparent, shedding light on the organisation’s purchases. By tracking spending and costs, your organisation can have more control over both direct and indirect procurement. In addition, the procurement software provides detailed spending analysis for any period. With increased spending visibility, you can negotiate better contracts with your suppliers. \

6. Develop Strong Supplier Relationships

Optimising supply chain processes lowers transaction costs and reduces supply chain risks. Strategic supplier relationships can be established with the use of e-procurement. Onboarding suppliers improves supplier competition, resulting in more discounts and savings for your organisation. It also helps in eliminating supplier monopoly, thus maximising the benefits of strategic sourcing. By focusing more on other aspects of procurement apart from cost savings, the digital procurement solution helps you to reach suppliers globally for maximum benefits.

7. User-Friendly Solution

Unlike ERP modules, the procurement software provides a user-friendly interface for the entire procurement team. Data from multiple databases will be pulled automatically to create automatic purchase orders. In addition, contracts are automatically drafted with data from the proposals. Supplier information is also fetched directly from the supplier database. Thus, e-procurement minimises the need for manual data entry, encouraging the procurement team to use it more.

Procol is one of the best procurement solutions that organisations use to realise up to 10% cost savings immediately. Schedule a demo with us to learn how you can implement e-procurement in just 7 days.