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However, the deployment of these technologies has often been isolated and disconnected from larger company initiatives. This fragmented approach has resulted in the “leakage” of potential procurement savings. There are five main areas which contribute to “leakage”, resulting in companies realising only a fraction of the potential benefits of procurement automation: · Contract management: Nearly 80% of business transactions are governed by a contract, yet few companies effectively communicate and manage the terms of these contracts within their organisation. As a result, companies miss huge savings opportunities by not enforcing internal compliance with contracts or policing price breaks and rebates from suppliers. · Procurement: Recent research of e-Procurement users found that, on average, companies process less than 20% of their total indirect goods procurement through their e-procurement system. Reasons for the low utilisation include
· Sourcing: While early adopters of e-Sourcing solutions were able to achieve cost savings in excess of 10% on average, most users today are unable to fully implement or realise these savings. Among the reasons for this are :
· Supplier performance measurement: Evaluating a supplier’s operational and financial performance for comparison against agreed contractual terms requires metrics to be assimilated from multiple systems. Capturing an accurate view of a supplier’s current and future performance also requires companies to access information from external sources as well. A lack of insight into supplier performance may cause buyers to make poor sourcing decisions and to miss key trends and indicators of supply chain risk. · Planning: Historically, most procurement planning initiatives focused on direct goods purchasing requirements, and failed to examine supplier capacity and capabilities. The typical planning technologies also overlook indirect goods procurement, limiting opportunities to aggregate buying volumes and optimise purchase plans for indirect goods spending. It’s therefore clear that advances in procurement and supply chain technologies have outpaced the strategies needed to effectively deploy them. Indeed, when complex technology solutions are implemented without a well thought out strategy or an understanding of the impact of non-technology factors, it is likely that savings leakage will occur and the deployment of the e-procurement will achieve sub optimal results. So check whether your e-procurement services vendor has capability, both from a technology and skills perspective to:
o Analyse
your existing procurement
environment; If you are able to tap into the highly specialised skills required for this, you can rest assured that the “leakage” of your e-procurement savings will evaporate and you will obtain maximum benefit from your investment.
Miraculum is proud to welcome CSIR, Fidelity Supercare, Unitrade, Compujet, i-Fusion and Office Connection to the community.
The rollout of Miraculum Hosted Procurement has been successful, in spite of certain challenges. Change management and employee training issues presented the greatest obstacles, however the joint M&F and Miraculum deployment team have successfully addressed these. The support given by Miraculum has been highly commendable and the business benefits are on-track, we are looking forward to the successful second phase roll out." Nigel Ressell, Head of the Administration department, Mutual & Federal
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