Spend Under Management: The Business Case for eProcurement Systems

Charlotte Sutton
Charlotte Sutton,
Corporate spend that is truly ‘under management’ must be: made with suppliers that were properly sourced and managed; made with proper purchase authorisation; properly coded for both financial allocation and purchase category; paid with the correct pricing and terms; processed quickly and efficiently by everyone involved; and clearly visible to management at all times. Only then will your organisation maximise savings and value, minimise risk and process costs. 
In this blog article, we outline the major areas of direct savings and strategic benefits that make up the business case for eProcurement systems to support your Spend Control program.
The benefits are derived by enabling you to continuously increase your level of Spend Under Management. In summary, those areas and detail elements are:
Reduce the cost of what you buy
  • Avoid unnecessary purchases
  • Increase savings from lower prices
  • Reduce freight/delivery costs due to order consolidation
  • Reduce late payment fees
  • Increase capture of early payment discounts
  • Reduce payment of duplicate & improper invoices
  • Increase financial control
  • Increase spend visibility
Increase procurement capacity
  • Increase savings from greater capacity for savings creation
  • Increase savings from more and higher volume discounts
  • Increase savings from lower prices due to improved supplier relationships
  • Reduce cost of unwanted contract renewals
Improve process efficiencies
  • Reduce cost of PO handling
  • Reduce cost of invoice capture
  • Reduce cost of invoice processing
  • Reduce cost of administrative support in AP & Procurement
  • Reduce audit costs
  • Reduce organisation-wide purchasing process costs
Minimise supplier risk
  • Reduce costs of problems caused by supplier non-performance
  • Reduce costs of liabilities caused by supplier non-compliance
Strategic Benefits
  • Increased financial control
  • Increased spend visibility
  • Increased contract commitment visibility
  • Increased transparency of the procurement process
  • Increased organisational agility
  • Increased workforce morale and productivity
Additional Benefits for Multi-Unit Organisations
  • Ability to effectively take a centre-led approach to procurement
  • Ability to leverage full buying power
  • Ability to share and consistently leverage best practices
To understand the applicable eProcurement tools that will help you gain the detail savings or strategic benefits, and to understand a basic approach to estimating what each area would mean to your organisation, download the PROACTIS Business Case Guide.
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