Procurement management solutions help businesses reduce cost
Electronic procurement systems manage company budgets effectively, maintain optimal stock levels and ultimately assist in providing high-quality customer service.
Centralised procurement systems help companies facilitate expenditure analysis, predict what’s needed, reduce costs and almost always help to increase profits. Today, more and more enterprises choose to focus on building centralised data- and analytics-driven procurement functions, instead of having different and separate programs, to gain more visibility, insights, efficiencies and cost reduction.
Around the world we see news highlighting the many ways in which the procurement process can be subverted for criminal gain from public to private enterprises. Although supposedly a process that is highly scrutinised, as with anything that is human-led, there remains potential for both error and criminal activity.
It is for this reason, explains Dario Debarbieri, Enterprise Outsourcing’s CEO for Asia Pacific, that the implementation of an electronic procurement management system is more important than ever. He mentions that it is also very important that the procurement system you choose can integrate with your point-of-sale (POS) system. The integration of FinanceApps with your POS system will assist in decreasing your costs and enable you to make accurate decisions based on previous data and predictive analytics.
A procurement management system is a tool designed to improve the processes around this, he says, since undertaking any form of procurement without the right processes and tools in place will inevitably create challenges for the organisation. This is because procurement is a highly strategic and critical area within any organisation, as it is the key to managing assets, either properly or improperly.
“The trouble with most current procurement approaches is that they are usually paper-based. Although this leaves a trail, it also lends itself to alterations easily being made, without anyone being any the wiser. Anything that can be changed in this manner is ripe for being abused in some way, which is why many large enterprises have moved their procurement into the digital realm. FinanceApps is a good example of this,” he says.
“There has been a lot of progress in implementing these systems, but the true measure of success lies in evolving these tools beyond mere procurement. By building analytics into the tool, for example, it becomes easier to predict exactly what will be needed and when. Furthermore, it should be remembered that procurement essentially comprises an ecosystem that encompasses the acquisition, use, management and disposal of items. FinanceApps provides digitalisation which can offer an advantage here, in that it can create data marks that are built into each step of the process, placing full control of the management of company assets in the hands of the procurement manager.”
Debarbieri indicates that the benefits of procurement systems like FinanceApps and similar applications are becoming more relevant than ever. Not only does having digital data marks ensure that the business pays the right price for the right asset, but enables the organisation to obtain the best resale value on an asset, as the solution ensures the correct valuation at all times. This means the business obtains the right price at purchase and the right price at sale.
“One must also remember that a large part of procurement is about managing budgets effectively. It’s here that applications like FinanceApps are able to help manage and automate the processes end-to-end, helping organisations reduce costs.
“Think about it: if you operate a restaurant and want to increase your advertising budget to bring in more customers, you will only be able to do so if your procurement costs and wastage are kept low. Otherwise, these areas will deplete your profits, leaving you with less money available, an inability to bring in new customers and a business that will, ultimately, have a very short life,” says Debarbieri.
Moreover, he says, a procurement system that knows what it needs to procure and when can use predictive analytics to determine when certain components may be required. This, in turn, improves the acquisition of goods, so the business doesn’t find itself stuck with either too much or too little stock. FinanceApps’ tried and tested algorithm analyses sales history data and accurately predicts future usage. This enables the application to predict what stock you need to order.
“Now imagine connecting such a system with unstructured data and artificial intelligence (AI)," says Debarbieri. "This will position you to be able to learn from other sources, like social media channels.
"Going back to the restaurant example, if you learn from these channels that a sporting event or concert close by is going to finish at a certain time, it is much easier to ensure that you have enough stock and staff to handle any increased influx of customers this might create.”
He suggests that this is the next step, after getting the system in place and ensuring it is properly controlling your assets, stock and people. Adding AI into the mix to enable you to predict and exploit unexpected business opportunities will offer many benefits he adds, pointing out that beyond this lies the unexplored terrain of technologies like blockchain.
“Blockchain is the next logical step here, as it is essentially a giant electronic ledger that cannot be altered. Using blockchain watermarks can help you to thoroughly understand the entire procurement process, allowing you to tell exactly where something comes from, how it got there and the process it has been through.
“Furthermore, these watermarks are designed in such a way that only the owner who appears on the blockchain can then sell the asset it is attached to. This will help eliminate fraud and improve prosecutions in those cases where it still does. These watermarks are going to significantly improve the credibility of transactions, so I have no doubt that blockchain is also going to become a key player in the procurement space in the near future,” he concludes.