Chapter 4. Making the Business Case for E-Procurement

Objective

As with any major investment of time and resources, an e-procurement initiative should be based upon a strong and well-documented business case.

  • The e-procurement business case comes from three areas: process efficiencies, compliance, and leverage.

  • Process efficiencies come not only from eliminating paperwork and human intervention, but also from shifting indirect purchasing responsibilities, to the employee desktop.

  • The system reduces maverick buying and ensures compliance to the organization’s purchasing guidelines.

  • E-procurement makes it possible to capture accurate and timely information on every purchase.

  • New reporting and decision support tools now help procurement specialists to scrutinize their buying patterns.


New reporting and decision support tools now help procurement specialists to scrutinize their buying patterns, providing more dependable information on performance, compliance, and the effectiveness of comparative buying practices and supplier selection. As we have already seen, there are always two types of cost involved in procurement of materials: first, the cost of the goods themselves, and second, the cost inherent in the process of buying the goods. Accordingly, when making the business case for e-procurement, it is important to look beyond just how the system can help you to shop for competitive pricing or receive consistent discounts from suppliers.

Although there are significant savings to be made through better buying decisions and contract compliance, it is even more important to look at the potential savings to be made from reducing procurement processing or transaction costs through digitizing and streamlining the process, reducing the cycle time, and eliminating unnecessary manual intervention.


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