Overcoming the Obstacles to e-Purchasing

Know the right questions to ask and the major factors involved when determining the appropriate e-procurement solution for your company


To alleviate this pain, companies must evaluate pricing schemes and fully understand costs of software licenses and support. Request information on fees and find out what to expect in terms of ROI. Is this ROI acceptable in both the short and long term?


Companies may want to explore a purchasing card scenario for payment with their supplier where the time value of money is factored into the equation. In this scenario, suppliers can receive payment within 24 to 48 hours, thus improving cash flow and offsetting costs. Is the time value of money important to the company? Most should say yes & a dollar in hand today is worth more than a dollar promised at a future time. Suppliers will come out ahead, not to mention improve their processing costs savings, as a direct result of streamlining and automating their purchasing process.


With the right business model for supplier payment and consolidation of payables, organizations might even realize a revenue stream from their financial institution.


Supplier Enablement


The logical step for many companies has been to jump into the buy side of the equation, but once they do, they find out that it's just one piece. While the slow-but-steady growth in e-purchasing has been a boon to buyers, one of the most critical shortcomings has been the demonstration of any real value for suppliers. Fewer than 20 percent have online catalogs, and continual demands for different data distribution methods, and catalog enablement, have caused suppliers to balk at embracing the revolution. Overcoming the need to reconfigure all of their data has proven to be the biggest hurdle.


e-Purchasing providers must allow the supplier to be part of the solution, not only maintaining the integrity of the process, but also improving it to include rapid payment, automated purchase orders and the ability to accept data in their preferred format. To achieve a truly automated and integrated corporate purchasing environment, today's procurement solutions must provide order delivery, acknowledgment and shipping notification, multiple payment methods, and customized file/message mapping and advanced reporting in one solution for the supplier.


Providers must commit to including suppliers in the planning process early on and work with them to develop a solution set that is customized for their unique needs. Come up with alternatives if the first solution doesn't fit to guarantee that the end result will provide the most appropriate and beneficial solution. Enablement should be a fundamental piece of the contract.


Payment


Another barrier to implementing an e-purchasing system is the payment method. Imagine investing millions of dollars in e-purchasing technology only to find that you cannot get the payment and important management information together in a way that avoids invoice processing, costly payment and check processing for payables, and the value of true ERP integration.


Whether a software provider has the capability to offer a payment mechanism is critical when moving forward with an e-purchasing program. By offering the capability for the payment piece, organizations can eliminate paper-based payments and mailed checks, streamlining the entire process for both buyers and suppliers. This not only results in fast product delivery, but also lowered costs and satisfied customers.


In this economy, saving money and improving efficiency are more important than ever before. Clearly, there is still work to be done and obstacles to overcome, but e-purchasing will continue to evolve because the benefits — tremendous cost savings, accelerated payment processes, and greater efficiency — are vital to every company's success.


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