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Digitization of Procurement: Why ERP is not a solution to address your Procurement Pain Areas?

Digitization of Procurement: Why ERP is not a solution to address your Procurement Pain Areas?

Thursday February 06, 2020,

5 min Read

As a leading Procurement Professional, you might always be wondering to get superior efficiency and savings from your team! The KPIs of the Procurement Department have accumulatively increased in the last decade, making it more strategic with the inclusion of Spend Visibility, Compliance Rate, Supplier Relationship Management, ROI and many more.

At such a point of time, Digitization as a tool is playing a vital role in procurement for visibility of spend and as a cost-effective measure! The main aim of Digitization is to enhance the productivity and efficiency of various departments across the organization and make sure they facilitate superior output. However, when we talk about digitizing the procurement, many professionals still rely on ERPs!

We understand ERPs are must-have for large organizations as an all-in-one package. However, comparing the deliverable of KPIs of procurement professionals at present, ERPs fall a way short!

Why ERP is not a solution to address your Procurement Pain Areas?

Disregarding all the benefits of ERP, organizations need to evaluate if it is the correct answer for the procurement function. Can ERP solutions address the specific needs of Procurement Teams ranging from cost reduction to increasing efficiency to gaining strategic foresight? Here is why we are telling you, ERP is not a solution to address your Procurement Pain Areas:

Gaps between Expectation and Deliverable!

Procurement teams require assistance in making effective purchasing decisions, leverage spend analytics and create economies of scale. While the ERPs are designed to categorically integrate business activities across the organization. Hence, it doesn't address the issues of the Procurement department.

Complex Functioning

Traditional ERPs are having a very complex User Interface Structure. Therefore, it brings out frustration and confusion within the team while mandatorily switching between different User Experiences.

Lack of Flexibility

ERP is an all-in-one package for the entire organization, including the functions such as product planning, inventory control, product distribution, CRM, finance and accounts. Thus, it doesn't specifically ease the life of professionals while performing their function in broader aspects.

More Time in Implementation

The time required for the implementation of ERP is very much higher. Due to their complex nature and large size deployment, it would take a lot of time to start leveraging the benefits that an ERP offers.

If Not ERP, then what is the solution? - Digitization of Procurement

Cloud-Based E-Procurement Solutions are easy to implement and you can start leveraging them in order to ease your procurement function. Perhaps, the best part of these Procurement digitization platforms is that you can even use them as a standalone platform. Here are some perks of having eProcurement software for your procurement team.

Less Time Involvement in Transactional Activities

The main benefit of deploying eProcurement software to look after your procurement is tremendous savings in time. When we put software into place, it will not only reduce the time spent on manual repetitive work but also enhance the efficiency of the Procurement Team.

Instead of spending time in converting PRs to POs, procurement teams should rather be focusing on strategic activities such as critical negotiations, enhancing Vendor base and developing good relations with them, identifying new sources to procure goods and materials, etc. The Procurement Digitization software will facilitate this opportunity to your procurement team.

Visibility of Spend & Analytics

Spend Visibility is essential for organizations in order to identify cost leakages, measure their performance and bench-marking it as per the market performance, identify the area of expenditure, optimizing work-capital, identifying price arbitrages, improve delivery performance, improvement in data quality, risk mitigation and many more. Gaining all this information through excel isn't possible!

Procure to Pay Software facilitates a single-window view of the entire spend of the organization without any manual intervention. Therefore, your organization will be able to effectively manage the spend and enhance the company's performance to a greater extent.

Less Time for Implementation

Implementation of ERP Software is not only complex but also it is highly time-consuming. It is noteworthy that the implementation time of ERPs ranges to a couple of years. Thus, it would take a lot of time before your organization starts getting any output from it.

On the other hand, P2P Software consumes very little time for implementation. Your team can start working on Procurement Software with little training most intuitively. Therefore, you will start getting output from your Digital transformation initiative within less time period.

Simplify Audit

An audit is a very crucial process, both for the auditor as well as for the department he is conducting Audit. When it comes to Procurement, the Auditor has to check many parameters during the Audit. Whenever the Auditor Walks In, the entire department is on the toes. Conducting the audit while going through the files and physical documents is a cumbersome task.

Procurement Digitization software provides visibility of all such decisions, transactions, and reports in a single section. Hence, facilitating the auditor with complete visibility in order to simply conduct the audit.

While the major focus of Industry 3.0 was to computerize the processes in the industry. Industry 4.0 is a transition towards Digitizing and Automating the processes and various functions in the industries. Terms like Artificial Intelligence (AI), Internet of Things (IoT), Machine Learning (ML) are no more buzzwords but also turning into real-life applications.

Are you planning to leverage these technologies and gain a competitive edge? Then this is the right time to initiate your Procurement Digitization Journey! Because all these technologies offer the best results when sufficient data is available. If you want to effectively collect data, then Digitization of Procurement is your answer!

Start your digitization journey now. Otherwise, you'll lag far behind your competitors.