E-Procurement Provides Significant Cost Savings

Nov. 2, 2007
New study shows 62% reduction in requisition-to-order processing costs.

A new study, "E-Procurement: Trials and Triumphs," released by Aberdeen, reports that E-procurement has improved cost savings and can streamlining internal processes while enhancing supplier relationships.

The study found that enterprises displayed a 35% improvement in spend under management, with a 41% reduction in maverick spend. Enterprises also reduced their requisition-to-order cost by 48%, and cut transaction cycle time in half. However, the research indicated that significant e-procurement challenges remain in areas of supplier enablement, catalog management and end-user adoption.

"Our research has discovered that the procurement department is no longer just a transaction center for placing orders, but can also be a source of competitive advantage by acting as an information hub supporting business planning and decision making. There is more to an e-procurement solution than cost savings; it is now a tool that removes manual error-prone repetitive tasks and promotes compliance with business controls allowing procurement resources to focus on more strategic tasks," said Amit Gupta, research analyst, Aberdeen.

Best-in-Class enterprises demonstrate the following performance benefits:

  • Place 78% spend under management control, which is 26% more than their peer enterprises
  • Display 83% on-contract spend, with 25% less maverick spend than all other enterprises.
  • On average, have requisition-to-order cycle times of one to two days, which is more than half of their peer firms, with transactions costs that are 33% lower than all other enterprises.

The e-procurement benchmark report recommends that companies start with a center-led procurement department led by an executive, who will leverage the capabilities of business partners and stakeholders, and drive end-user adoption. Most enterprises will benefit by leveraging technology solutions such as supplier networks, catalog hubs, which allow quick enabling of suppliers and transmitting purchase orders electronically. Additionally, companies should aim to integrate e-procurement with finance and accounts payable systems.

To obtain a complimentary copy of the report, visit: http://www.aberdeen.com/link/sponsor.asp?cid=4215

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