Today, many companies have begun their transformation by digitalising and automating their processes. Procurement processes, which are especially time-consuming, repetitive and without real added value are the ideal candidates to begin such an approach.
To do this, companies are equipping themselves with e-procurement solutions that will enable them to dematerialise purchases made with their suppliers and thereby optimise their Procure-to-Pay (P2P) process. As a source of savings and overall efficiency, these solutions have been broadly developed in recent years. At first glance, e-procurement operations may appear complex, with a broad range of tools available. We’ll help you find your way through by detailing the key stages of e-procurement and its main benefits.
Dematerialisation of the procurement process in three stages
To be able to automate the procurement process, companies must follow three essential stages.
Stage 1: accessing the offering
First of all, users need to access a product offering that meets their needs, proposed by listed suppliers under contractual conditions negotiated by their procurement department (discounts, product exclusions, shipping costs, etc.).
To do so, they may use:
- Their suppliers’ webshop: quick and easy to put in place, this solution has no additional costs for companies.
- An e-catalogue: although it requires more significant resources and investments, implementing an e-catalogue enables you to go further in the dematerialisation and automation of the entire Procure-to-Pay process (including sending orders and receiving invoices).
There are two main categories of e-catalogue:
- Punch-Out: with this ‘dynamic’ e-catalogue, companies have access to an offering updated in real time (price, stock availability and delivery date). This type of catalogue is especially suitable for long lists of products and avoids purchasing from unlisted suppliers.
- The hosted catalogue: this ‘static’ e-catalogue gives companies access to a defined offering, guaranteeing the stability of the prices negotiated. This solution is more suitable for restricted lists of products.
Users can then choose their products online and create their shopping basket, which is converted into a purchase request. This is then automatically integrated in the information system and can follow the predefined validation circuit to develop into a purchase order. To mass-market orders and streamline deliveries in order to optimise, a minimum amount per order is generally incorporated in the tool.
Stage 2: the order
Once validated, the order is forwarded to the supplier involved in the form of an electronic document, via EDI (Electronic Data Interchange). As a reminder, EDI refers to the exchange of standardised electronic documents between two sales partners, computer to computer. This system can operate with a direct connection or a P2P solution.
This stage, referred to as e-ordering, allows you to directly integrate the order in partners’ information systems, which accelerates processing and improves quality. The products ordered online are then prepared and sent to the company.
Stage 3: the invoice
After the goods has been delivered, the company receives the invoice from its supplier. The dematerialised invoice appears in the form of an electronic document (via EDI) or a PDF file, certified by a trusted third party. In the case of EDI, the invoice is automatically reconciled with the purchase order, without human intervention. The company can then make the payment to the supplier.
The benefits of dematerialising the procurement process
In light of the current competitiveness challenges that procurement departments must meet, transaction dematerialisation is becoming essential.
First of all, e-procurement will optimise the total cost of ownership of goods and/or services purchased by companies. An approach of this kind will not only reduce the cost of each transaction, it will also promote order massification. And up to 80% savings are made[1]!
Through this digitalisation project, procurement departments also aim for productivity gains, while contributing to the satisfaction of internal customers. Process dematerialisation and automation (to a certain degree) will enable multiple stakeholders to gain valuable time:
- Simplified everyday management for procurement;
- Minimal supplier invoice and claims processing for accounting;
- Facilitated product sourcing for users…
Thanks to the e-procurement solution, the procurement and finance functions will also obtain a clear vision of the business spending. This allows them to bring this spending under control and identify future room for improvement.
Finally, e-procurement process is part of an environmental approach. Digitalised transactional processes will emit fewer greenhouse gases in comparison to traditional processes which involve paper consumption, sending by post, etc.
As you can tell, transaction dematerialisation is a first step towards the digital transformation of the procurement function. In this respect, we must reiterate that a project of this kind involves real change management! Among the success drivers for such a project, internal stakeholder support and supplier involvement are essential.
- To find out more about e-procurement, download our free white paper.
[1] Manutan Group, internal data
