Procure to Pay

Do you know if your company is buying off contract? What you need to know about an E-procurement tool…

Businesses are driven by the needs of their customers. Many companies perish because they cannot align their product or service to the needs and wants of the customer. Do you know if your company is buying off contract? What you need to know about an E-procurement tool…

Purchasing is a simple idea; negotiate the best price with a supplier and present the contracted items to your constituents for purchasing:

• The purchasing department puts out a bid for a category like office or janitorial supplies
  
• The terms of the contract and associated pricing is determined
• The entire organization can now take advantage of the new contract pricing… maybe.
  

City, State and county governments are required to bid out contracts for commodities and services and have a well established process to create the proper terms and contracts. Unfortunately, it can be very difficult to promote these contracts to their constituents without a structured tool and set of purchasing processes that help enforce contract compliance.

Most contracts are designed to create a platform that allows internal stakeholders to get the best pricing available but the execution of the purchasing process does not necessarily lock the end user into using those contracts.

Because of the manual nature of the paper PO process, many purchasing departments become bogged down in trying to review each PO to determine if pricing is coming from a preferred vendor and checking for price accuracy. This in turn causes frustration and lengthens the entire cycle. Some organizations will let Pos under a certain amount go through without much notice due to the sheer volume that come across their desks.

With an E-procurement platform, stakeholders can leverage online catalog portals that contain contracted pricing from the beginning. The shopping experience becomes less of a burden and helps control maverick spending. If you are still using a manual PO to get your orders out, chances are your losing money by not leveraging your contracts on a daily basis.

These are not complex tools to deploy, but they are, nonetheless applications that require some organizational change management to take place. In most cases, this involves re-evaluating current business processes, practices and policies that may have been developed years earlier and determine if they are still viable in today’s climate.

Once the new polices and processes are in place, they will allow the tool to perform at maximum efficiency to promote a better Contract to PO process. In addition, the cost of doing business with your suppliers will decrease over time as you can now point to historical PO data to drive down future supply costs.

In summary, implementing a tool to fix your contract to PO process will not be the silver bullet to fix your procurement issues unless you maximize its use and functionality. Plan to re-evaluate and implement new business processes as you step away from paper into e-procurement.


Gravity Gardener

 

Gravity Gardener