Traditional procurement vs e-procurement – major differences

Traditional vs e-Procurement

Procurement is one of the most important business processes for many organizations, whether large enterprises or small and medium size companies. Many decisions taken by departments have a procurement implication that can impact on the overall cost of carrying out the decision. Here cost includes the total cost of the good or service and not simply the price that is paid. In today’s Digital Era, companies are looking for ways to adapt to digitization & transform business processes. As part of the on-going digital revolution, Traditional vs. e-Procurement has a become an important topic of conversation for decision makers in organizations. CFOs & CPOs are looking for customized solutions & simplified buying solutions to manage their indirect spend. e-Procurement is offering more than just one solution to the many requirements of a business.

In the private sector, procurement is viewed as a strategic function working to improve the organization’s profitability. Procurement is seen as helping to streamline processes, reduce raw material prices and costs, and identifying better sources of supply.

However, the process often pose many challenges such as understatement of purchase details, inappropriate selection methods, inadequate supplier information, selecting unsuitable supplier and risk in negotiations, just to name a few. However, with the advent of technology, automation of the procurement process can now be done which can help achieve the best results for your procurement projects.

Debate over the Traditional procurement vs e-procurement goes on but with majority organizations & business verticals moving towards Procurement Automation, traditional procurement is losing its ground.

Today, e-Procurement has changed the way businesses buy & provided the much needed spend visibility into the indirect spend management.

Below are just some of the values and additional advantages brought by technology in the procurement process that the traditional  procurement processes cannot provide.

1.Accelerated process time

With electronic procurement (e-procurement), companies can save time as its automated facility speeds up the internal process in terms of sourcing. Significantly, negotiation and getting the best price can be completed in just few clicks.

2.Easy access to more suppliers

E-procurement helps lessen the effort of organizations since it allows easy access to more suppliers, which opens more possibilities and options. Unlike the traditional Procurement process, this enables to connect with a wide-range of suppliers not just locally, but also globally.

3.Bids are placed in one interface

When the suppliers bid, it is done in one platform which can easily be accessed by the buyers and suppliers. Manual negotiations are minimized. There is complete transparency in negotiations.

4.Higher productivity

Since it automates the process, companies don’t have to spend so much effort and time when sourcing. The whole process is done electronically so the company can focus on other strategic tasks and function of their business.

5.Transparency in purchasing transactions

With the use of advance technology, documentation and communication become easier. This can ensure compliance between the contract and the actual procedure. Furthermore, transparency is necessary in sourcing to prevent corruption that may occur during transactions of both organizations.

Some companies already apply procurement compliance rules, but what makes e-procurement unique is the value it gives to the organizations. Aside from having a leading and robust platform, e-procurement service providers have vital roles in this matter. It is critical for enterprises to choose the e-procurement solution and service provider that does not only offer a platform that automate the sourcing process, but also offers skills and expertise in the procurement process wherein the organization’s decision makers may be guided as to how they can maximize the advantages of the platform.

Other than the platform, the guidance of experts guarantees your company minimum savings of 3 – 8 percent on your annual spend, increase in productivity, better transparency in purchasing transactions and the overall improvement in bottom line numbers. In a nutshell, Traditional Vs. e-Procurement debate’s takeaway is that companies wanting to sustain in the longer run, will switch to e-Procurement. Companies will use spend analytics to make informed buying decisions, get enhanced efficiency & reduced costs, all aided by e-Procurement.

In the Traditional Procurement vs. e-Procurement race, the latter is definitively coming across as a winner.

If you’re looking to switch to Digital Procurement, reach out to us & we’ll help you!

Author – Aval Sethi, Founder

Aval Sethi is the founder & CEO of ProTaiga and is based in New Delhi, India. As a result driven entrepreneur, Aval leads Business Transformation and Procurement Automation initiatives focusing on new-age innovation for businesses through his company.

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