PayStream’s recent survey of procurement professionals from over 350 U.S.-based businesses reveals a renewed interest in Web-enabled procurement solutions – especially applications that have been enhanced by purchasing cards, approval workflow technologies and integration with online vendor catalogs.
Benefits of Automation Become Clear
Automating the procurement process delivers a number of tangible benefits – depending on the breadth of the solution implemented and the extent of integration with other processes in the finance department. Our survey revealed that, on average, adopter organizations can expect to achieve the following benefits:
- Lower transaction processing costs and the ability to significantly compress order cycle times.
- Lower transaction processing costs and the ability to significantly compress order cycle times.
- Increased compliance with corporate policies and reduction in maverick/ad hoc spending.
- Visibility across the entire spend management process in real-time to authorized system users.
- Ability to consolidate spend across the entire organization to negotiate bulk discounts/ preferential pricing with suppliers.
- Ability to view spend as it happens and compare it against budgets, instead of looking at it after the fact.
- Comprehensive audit trails, with date and time stamps, for every action taken by every user within the system.
- Higher employee productivity and satisfaction with the availability of an easy-to-use, intuitive system.
Key Procurement Metrics to Track
“What gets measured gets done” is an old adage which is still very applicable to any business, or any task for that matter. The procurement process has a number of moving parts and people and unless certain metrics are identified and performance measured against these indicators, it is quite likely that something will fall through the cracks.
KPIs should be measured at least once every quarter or six months. These metrics or key performance indicators (KPIs) become all the more critical when a company is going through a merger or acquisition, new technology implementation or organization restructuring. Measuring and comparing KPIs before and after any of these are a good indication of the impact it had on the procurement process. Here are some key KPIs procurement departments should track on a periodic basis:
- Percent of total spend under management of the procurement group
- Cost to process/complete a single requisition-to-order cycle
- Number of days to complete a requisition-to-order cycle
- Percent of total spend that is maverick/ad hoc/off contract
- Percent of suppliers accounting for 80 percent of spending
- Cost savings as a percentage of total spend and managed spend
Keep watching this space for more information on electronic procurement based on our survey results – challenges, benefits, best practices and gaining supplier acceptance.
