The survey conducted by Marketplanet among purchasing managers at the Procon/Polzak 2015 Conference shows that companies employ purchase-related IT solutions mainly for purchase orders, contract management and negotiations with suppliers.
Purchase orders management at the top of the ranking
68% of respondents indicated that the area supported with IT tools in their companies is the management of purchase orders. It could be expected, considering the size of the companies those respondents represent. In big and medium-sized enterprises, purchase orders are recorded in the ERP system where they receive relevant statuses and are further processed for the needs of individual departments of the company. It is highly probable that this is where the purchasing-related process supported with IT tools ends. The distribution of documents is managed in a traditional way (mail, a print out, fax, etc) – it has a historical background as cooperation with partners required expensive implementations based on the EDI solution as well as one(buyer)-to-one(seller) type of integration. Only a small group of enterprises (21% of respondents) that transferred the process of purchase orders management outside of the organization and involved suppliers in the process, actually advantage from the full potential of cloud solutions such as Marketplanet OnePlace. Today, we are not limited by a standard integration approach relying on the EDI. With one connection (a supplier cloud) we are able to link the whole internal world of the company with a network of business partners. To keep the continuity of transactions with a supplier (purchase order, receipt, invoice, settlement), both of the parties to the transaction have to be involved in the process. Additionally, the supplier cloud gives third parties the opportunity to support the process (financing, insurance, banking services, electronic processing of documents). Today, companies that start implementations in that area should look much further than the very inside of an organization. A real competitive advantage can only be achieved if the process is electronic in every aspect and with an electronic closure, including communication with business partners.
Contract management also high in the ranking
Contract management is another area supported with IT tools indicated by as much as 61% of purchasing managers. However, the important thing is to clarify what is meant by the IT-supported contract management. Is it solely a record of contracts or is it active management of contracts on each stage of their processing. Linking contracts to electronic catalogues, contracts archiving, scanned documents and contract validity (e.g. annexes) management, electronic negotiations of contracts and application of electronic signature – these are possibilities offered by advanced solutions that support purchasing. Nowadays, to have an archive and a record is not sufficient. Active management is needed not only for the process of exchange of documents but, most of all, for managing the content of the documents including the processing of business information related to the limits, price lists, catalogues, budgets – inside and outside of an organization. The prospect of electronic negotiations and conclusion of contracts has already been made available – in the form of a supplier cloud such as OnePlace. A contract is an element of transaction that closes the sourcing process and opens the performance stage (e-procurement) – as a unique link between the two processes it becomes an essential element of implementation of IT solutions, a form of an electronic existence and providing updated information. The potential is derived not only from the archiving itself or from access to the content of current contractual obligations in one place (the system) inside the organization, but most of all, from electronic exchange of information with suppliers (contracts, annexes, purchase orders, receipts, invoices). Fulfilling all the integration roles mentioned above, including cooperation with suppliers, we enable an organization and its business partners to fully advantage from the potential of IT tools dedicated to contracts.
eProcurement – a popular catchphrase, but is it interpreted correctly?
Management of purchase orders, contracts, requirements (50% of respondents) and invoices (51% respondents) are solutions of eProcurement. They support purchases on an operational level. It is worth to mention that due to the nature of the Polish language, eProcurement is often misinterpreted as a synonym for electronic management of the entire purchase chain.
Advanced solutions – such as the Marketplanet Platform and OnePlace – automate the entire process of purchasing on an operational level.
- Generated requirements are further subject to verification processes and after that are automatically aggregated.
- The access to integrated requirements is available to dedicated users who are responsible for assigning purchase needs to relevant contracts.
- Once the requirement has been assigned to a contract, a purchase order is created in the system and transmitted to appropriate suppliers.
- Receipt of a purchase is confirmed and verified electronically.
- Compliance of an issued invoice is verified with the purchase order and receipt terms (3 way matching).
Clearly, implementation of IT solutions in this area extends far beyond preparation of purchase orders and contracts recording. All the activities are automated, fast and transparent, which significantly reduces the time needed to make a purchase. It supports the control over the process and allows for effective management of the company’s resources, while eliminating manual work and errors related to operational activities.
Eprocurement dedicated to an operational service of the purchasing process (often defined as p2p – Procure to Pay) offers the possibility to effectively manage multiple complex transactions (requirements, purchase orders, invoices), which ensures a relevant form of monitoring and reduced involvement of resources of the organization.
The overall potential of this area rests in the automation and implementation of IT solutions that replace manual activities required in a single transaction.
About the survey
The survey was conducted during the Procon/Polzak 2015 Conference held in Warsaw on 22-23 October. Ninety purchasing managers responded to a question about how they support their companies with IT tools in the area of purchasing. The survey took the form of a multicriteria choice questionnaire.