In a business, of course, there are various parts that have their respective functions. For example, the finance department that functions as a company or business financial control. There is an important part in a business, namely procurement management.
This section plays an important role in a procurement process. Therefore, you need to understand the benefits and how important this part is in the business process. In addition, understand the definition and how it works briefly.
Table of Contents
- 1 Definition of eProcurement
- 2 Benefits of Procurement Management System
Definition of eProcurement
Before understanding the benefits of an eprocurement software, you need to know the definition of the principles in this section. Procurement itself is an activity carried out by companies to buy goods. What types of goods were purchased? There are various types.
For example, production machines, building materials, business equipment and services that companies really need to run their business. Perhaps the question often arises that why do companies need this section? Of course the goal is to help companies get the desired goods.
When you need an item, of course the company wants to get what it needs properly. This good need is good in terms of quality, location, processing time and most importantly a matter of price.
Of course, this section also functions so that the costs incurred by the company are as small as possible. But by getting goods that remain quality. Thus the company can get a bigger profit. Therefore, it is important for companies to implement a procurement management system.
Benefits of Procurement Management System
Not only to get a cheaper price, will this system provide benefits for the company. So do not be surprised if almost all large companies have this system to assist the procurement process. The following is a full explanation of the 7 benefits of a procurement management system:
1. Procurement Management Can Reduce Operational Costs
The procurement solutions should be concise and clear. Therefore, it takes a team that has a duty to ensure that all company needs can be met. If it is not regulated, it will be difficult for the company to record which goods have been purchased or not.
If it is not regulated in a system, the procurement process also cannot be made concisely. With a clear management system, the procurement of goods can also be done easily. For example, it becomes clearer about the timeline of a procurement of goods. The company can clearly see when the tender will be conducted and when the goods can be used.
Even in an era of rapid technological development, the procurement system is carried out electronically or commonly known as e-procurement. With this system the company is much more able to reduce operating costs. Companies no longer need to spend money on meeting consumption to purchasing paper.
The company only needs to appoint one person as the person in charge for each item and provide it with digital devices. These methods are the company’s way of reducing operational costs.
2. Transparency is improved
All procurement of goods will certainly be recorded in a system. Thus, procurement activities will be much more transparent. All sections can check the prices offered by outside parties or vendors. Frauds such as price mark ups will not occur because they can be checked through the system.
This process also helps oversee procurement management. Moreover, all the process of appointment to procurement will be recorded by the system and made into an archive. Supplier and vendor data can also be recapitulated and can be accessed easily. This step can be a way to prevent corruption, collusion and nepotism. The company can also ensure that all payments are made on time.
3. Can Be More Efficient and Effective
All the systems created will facilitate the entire appointment process to procurement. For example, if it is carried out using a tender system, it is easy for companies to check and compare bids. It would certainly be much more efficient if you didn’t use the system because you had to check the bidding papers one by one.
Companies can also do filters. For example, looking for a vendor or supplier who provides the lowest offer or one that fits the budget. Thus, the procurement team no longer needs to read all offers that are not within the budget. At the time of appointment of suppliers is also easier.
With the system, the team will be able to see the details of the vendor’s offer. For example, starting from the delivery period and payment time. This data can also be stored in the system. If you need it at any time, you no longer need to bother looking for vendor and supplier data.
4. Productivity Can Increase Due to Procurement Management
With the help of procurement management, all procurement processes can be carried out quickly and easily. All stages from planning to payment can be done quickly. Thus, the procurement team no longer needs to take a long time when working on a procurement of goods.
Faster processes also help companies be more productive. This can also affect the production costs incurred by the company. Moreover, the system is also easy to use and can store many archives. The procurement process can be done without the need to start from scratch.
5. Lowering the Risk of Errors
Human error is very likely to occur in all processes in the company. With the procurement management system, all employees can clearly see the stages that must be passed to procure goods. With this guide, of course, the team in charge will not miss this stage.
Employees also easily correct the steps taken. Work can also be done faster and without worrying about human error. The system also allows the previous transaction stages to be reopened. Thus one can make comparisons with previous procurements.
6. More Fair and Honest
One of the problems that often arise due to the procurement of goods is fraud between vendors or suppliers. The term ‘insider’ often makes the procurement system unhealthy. With a clear system, all bidders or auction participants can get justice.
All vendors and suppliers who meet the requirements can certainly follow the stages of procurement of goods. Companies also benefit much more because they can find goods or services that may be more suitable and of higher quality.
7. Facilitate Financial Reports
The process of procurement of goods will be closely related to the financial statements. With a clear procurement management system, accountants can more easily compile financial reports that are more transparent and also more credible. The risk of fraud will be minimized.
Moreover, data or archives are made clearly and neatly. Thus the company’s financial team will easily check. Payment processing is also only done on everything that actually happened. There will be no payment for a fictitious item order.
It turns out that the benefits of the procurement management system are very profitable for the company. Not only can you get the best goods or services. Companies can also prevent things that are detrimental, especially in terms of finance. The procurement process is also more fair and transparent.