Every Supply Chain executive can tell you that sourcing strategy, category depth of expertise, negotiation prowess, and procurement execution are the critical components of a highly effective supply management initiative. If everyone knows the basics, why do we still see such an amazing opportunity in eProcurement? It’s all about visibility (or lack thereof) of procurment processes.

Lack of access to spend metrics and controlled processes has been a big block for many Source to Settlle process improvement efforts. The opportunity for the supply chain organization is enormous — combined with payables automation, it’s very enticing. Moreover, spend data is also vital for other business strategies, such as budgeting and planning, inventory control, and product development.

Data visibility is critical for identifying hard-dollar savings opportunities and developing sourcing, budgeting, planning, and product strategies. Most importantly, it is critical because with it, overall Spend Visibility will provide an important foundation for advanced strategic working capital optimization. Likewise this sort of data and analysis leads to an entire change in corporate procurement culture, where procure-to-pay becomes part of an overall strategic view towards financial strength.

We’ve seen some very compelling ROI’s from recent initiatives at companies such as American Express (Noreen Dalton’s Presentation at IQPC Purchase to Pay in 2007 was very illustrative) and Reuters. These companies seem to have a renewed emphasis on the expense side of things and have drank the ‘control costs’ cool aid.

Here’s a neat thought:

“It takes at least $5 in new sales to equal the same impact as a $1 reduction in procurement or supply chain costs.”

In this context, companies can move towards the goal - Corporate team cross-functionality with solid Spend Analysis being driven by a Payment Tsar. In this scenario, a solid procure-to-pay strategy with eProcurement at its core stands to drive future financial efficiency, business process improvement, and automation initiatives.

PayStream recently published “Electronic Procurement: Automation Options for Your Purchasing Processes,” for innovative and forward-thinking organizations that have an active an interest in pursuing and adopting e-procurement solutions. The report is writen to help procurement managers make fact-based decisions about vendors to consider for thier automation program. The report contains solution profiles & analyst reviews of Ariba | BasWare | Corbus, LLC | ExpenseWatch.com | Ketera | Perfect Commerce | Verian Technologies.

We all would like to think we are in control of our process, the reality is — if we don’t have strong data on our spend, we’re still at ground zero.

Last 5 posts by Henry Ijams

• Invoice Automation & Discount Management -- the New Look of Accounts Payable - June 23rd, 2008
• The Eight Building Blocks of Supply Chain Finance & Discount Management - December 28th, 2007
• eProcurement - Moving from Technology to Execution - December 6th, 2007
• Building a Bulletproof Business Case for Paperless Technology - August 25th, 2007
• What is Dynamic Payables Discounting? - August 7th, 2007

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