E-procurement - Reasons Why Digitize Procurement Processes

Hello, my name is Kamila Kania and I am a Business Solution Manager for Comarch. In my daily duties I focus on EDI and e-Invoicing services on the global markets. Today I have a pleasure to tell you a bit about e-Procurement meaning and about reasons why digitize procurement processes. 

Do you get this feeling that your work life would be much simpler and effective if you wouldn’t have to check and validate everything by yourself? How many times your most important business transactions were endangered because purchase orders or invoice got stuck in someone’s mailbox? I am sure that if you deal with procurement process in your professional life you can easily relate to these situations. I know it from my experiences. That is why I am convinced that electronic procurement can improve your day-to-day tasks and your business shape in general. 

e-Procurement is the electronic management of all activities in the procure to pay process which is done through online platforms. It enables exchange of documents between a company’s internal ERP systems and different business partners. All documents are sent and received in electronic format and the whole procurement process is automated. 

Think about the producer of your favorite snack and imagine how complex processes need to be put in place in order for you to be able to grab this snack from a shop shelf. 

First, the buyer who represents this store creates the purchase order. It needs to be sent by email to the producer. Someone manually enters this order and creates the invoice. In many cases such invoice needs to be approved by different departments, for example head of accounting or financial controlling. Only afterwards it can be sent to a buyer. We are still at a stage of issuing an invoice. 

You can see that without a digital procurement this procedure engages several people it is time consuming and error-prone. 

With an e-Procurement solution in place this producer and his business partners such as chains of stores can be in direct connection and the whole process can be automated. Documents can be transmitted from one internal system to another. There is a possibility to simply flip a purchase order to an invoice or to a dispatch advice. Each of these documents will be checked automatically and manual work becomes redundant. What is especially challenging and crucial nowadays it is that e-Procurement solutions should also include integration with centralized platforms established by governments for e-Invoicing and e-Reporting, for example: KSeF in Poland, My Invoic in Malaysia or public billing portal in France. It is only smart to prepare your business for new regulations. 

For example in Poland very soon an invoice can actually be considered as a valid document when it will be submitted by the government platform. This can impact your accounts payable and receivable processes and balance. 

Procurement process is a far more complex than just purchasing of goods and services. The challenges for well-organized procurement teams vary by industry. 

What is more, all of the procurement actions require a significant number of documents which need to be exchanged on a daily basis, such as orders, dispatch advices, invoices, vendor details, inventory reports and so on.Let’s dive into the reasons why digitize procurement processes!

Regardless of the business branch, a lot depends on the effective exchange of information between business partners – ranging from master data synchronization, through order and contract management, all the way to delivery, receipt, invoice processing and payments. That is why companies are seeking electronic systems which help them to validate accuracy of each document and supports various communication channels between a variety of partners. 

Let’s say that you are a procurement manager and you have 1 000 partners in your business portfolio. Each of them can be using a different ERP system and they might be expecting you to provide documents to different departments on their side simultaneously. Even if you would have to exchange a one single document with each of them manually it will cost you a lot of time and effort. With the e-Procurement solution you only need to proceed with issuing all documents on your internal system side in a regular way and the rest of communication is automated by your service provider. 

Another trigger for digitalization is the need to increase efficiency and to speed up internal processes. Let’s not forget about cost savings through bureaucracy reduction and automation. At Comarch we have valid numbers to prove these advantages. Our research shows that by implementing Comarch EDI solution you can achieve 58% cost reduction in the transaction of supply chain process, plus about 65% accelerated speed of business processes.

Going on: VAT and legal compliance are among the most difficult processes that international companies have to deal with. This triggers the need of choosing a solution for electronic data interchange which will meet and maintain compliance requirements. To sum up our insight on e-Procurement let’s name the main benefits to gain by implementing an e-Procurement:

• Automation of procurement processes and paperless flow of documents means cost reduction.
• Increased liquidity and efficiency through faster document processing.
• Counterfeit protection through numerous automated validation steps.
• Improved business relations thanks to the high level of quality of documents and speeded up exchange of information.
• Legal compliance.

Thank you for exploring the advantages of e-Procurement with me. If you want to know more – do not hesitate to contact me!