Olivier Audino
Webinar :
Cross-border Purchases and VAT: Optimization Strategies
Tuesday Sept. 10, 2024 at 11 am (France)
In the digital age, businesses must seek to improve their efficiency, speed, and agility to succeed. One of the ways to do this is to carry out digital transformation, especially in their purchasing function. E-purchase, e-procurement, e-sourcing... these are all names to refer to the digitization of purchases. Faced with an unstable economic context and ever higher performance objectives, procurement departments are forced to deploy digital solutions to better resist. This solution has become a real success factor for businesses. However, its application rate is still low nowadays. Hence the question: The purchase and technology: are they friends or enemies?
Just like other terms that start with the prefix “e” for “electronic,” the e-Procurement refers to the dematerialization of the purchasing process. It is a process that makes it possible to centralize, streamline and automate purchases and supplies using digital solutions. THEThe purchase, also called e-procurement or e-sourcing, takes place from the selection of suppliers and products through online or electronic catalogs to the purchasing strategy, including the placing of online orders (e-ordering), electronic invoicing (e-invoicing) and online payment.
Although the terms e-Procurement, e-procurement and e-sourcing are often used to refer to the same thing, details must be made. THEThe purchase consists in using technologies in the purchasing process itself (e-sourcing) and in the procurement process (e-procurement).
E-sourcing consists in using digital solutions to take care of all stages of the traditional purchasing process. Finally, e-procurement consists in automating the management of supplies. It should be noted that this solution is only suitable for corporate or B2B purchases. It does not concern personal purchases (B2C).
Unlike e-commerce, e-Procurement uses a closed and secure system. Only registered users can access it. This includes suppliers, buyers, management, and internal customers.
For 15 years, the technology applied to procurement is Bernard Malataverne's playground. His judgment is unquestionable: the techno business is outdated, even though its adoption rate is low.
Malataverne goes on to cite the Project Management Institute study (02.2015) according to which average IT projects exceed their budget by 45%, take 7% more time and offer 56% less value than expected. And that's been for years.
Influencer bloggers, analysts, very serious researchers from the Aberdeen Group or the Hackett Group, in short, the whole market, needs e-Sourcing tools or e-Procurement efficient. They are convinced of the benefits that such tools can generate... if they are used well.
The numbers speak for themselves: Malataverne cites the 2016 CPO study “How the Best-in-Class Leverage eSourcing for Superior Performance” according to which
“The teams e-Procurement equipped with reliable tools allow, among other things, savings on their e-sourcing projects that are on average 7% higher than the competition”.
However, the use of tools E-purchases — when there are any in the company — stagnates. So, complains Malataverne, “why don't buyers — who would have every interest in using such a tool? ” His opinion: psychological resistance to change, quite simply!
Digital transformation is an opportunity for all businesses, regardless of their sector of activity or size. Contrary to what many believe, the deployment of digital solutions to perform the various functions within the company, including the purchasing function, is not only reserved for large international firms. Even SMEs and VSEs will be able to adopt them and benefit from all the advantages of e-Procurement.
What is happening today is that many businesses or organizations still refuse to launch. Today, we identify 4 main obstacles to the digital transformation of the company:
A study conducted by Bpifrance among 1800 SMEs and ETIs in France revealed that the complexity of the subject is the main obstacle to the adoption of technologies, including e-Procurement. Artificial intelligence, big data and everything else are complex subjects, and still relatively unknown to the general public. Moreover, it is a field in constant evolution. You should know that digitalization is not an end in itself. It is a movement, a state of mind that is evolving. Many opportunities are still to come, and to be discovered. They will be able to contribute enormously to the purchasing function. One of the ways to get around this obstacle is to be supported by a professional, like BME Consulting, to safely and calmly begin this digital transformation of the purchasing department, or e-Procurement.
According to the Bpifrance study, a third of the managers interviewed think that the lack of internal skills can also hinder the digital transformation of companies, regardless of their size.
Whether it is to dematerialize the purchasing process using e-sourcing tools and software, such as Sourcing Force, to automate procurement management through artificial intelligence, to respond to new business challenges through omnichannel communication or to analyze data with big data, all this requires a certain level of skills. Certainly, businesses see digital technology as an opportunity to metamorphose and grow, but deploying these technological tools is not enough. We must also think about their development. Hence the need to support internal staff and train them in the process.
This factor is underlined by 28% of business leaders interviewed by Bpifrance as being one of the obstacles to the digital transition, and therefore to the adoption of e-Procurement. Whether it is to introduce these technological tools into the company or to receive support and training, digital transformation generates a cost. Even today, the latter is relatively high. Especially since some companies, due to ignorance of these new tools or because of a poor identification of their needs, rush to digital solutions that are often very expensive and yet unsuitable.
Other companies are simply reluctant to start digitalization because of the high costs that this involves (purchases of new tools, staff training, recruitment, etc.).
This is another reason that can hinder businesses from adopting digitalization according to 28% of respondents. Indeed, when we talk about digital transformation, it is not only a question of injecting new digital tools or solutions into the company. It really means engaging the entire business, including its suppliers, in a new way of working and creating value. It's a real metamorphosis that some businesses are not yet ready to experience for all sorts of reasons.
Some of the factors that resist change in businesses include:
Changing is a challenge. Moving in an unknown direction is a major source of stress. And it makes sense to resist it. However, change is not impossible. You just have to understand that change management is an essential step in the success of a project to deploy e-Procurement. This must be done gradually. A plan for the deployment and adoption of the SI procurement tool should be established.
As a first step, change must be accepted and adopted by all actors concerned. This requires the involvement of management or top management. It is the latter who must initiate the maneuver and share it with all the staff.
The deployment of an e-purchasing tool, such as Sourcing Force, must be entrusted to a project team. Its role is to inform, train and involve all actors involved in the process, starting with the buyers themselves, management, but also suppliers. Since they will be required to use certain functionalities of the tool, they must be prepared and introduced to the process.
Finally, good communication is essential for the success of a digital procurement transformation project. A dashboard should be created with all the necessary indicators to allow everyone to monitor the evolution of the software deployment and the results obtained. Meetings should also be organized, as well as debriefs after using certain features, to clarify any points that seem unclear. Many other communication tools exist to implement digital transformation, including annual or semi-annual training, reports, newsletters, etc. It is up to each organization to find the means of communication that best suits it!
The use of e-Procurement, or to technological tools applied to procurement, brings numerous advantages to purchasing departments:
So far, the cost management and analysis tools used by Purchasing functions have limited functionality. The arrival of new technologies, such as artificial intelligence and machine learning, is making things much better. By combining various data sources, the tools e-Procurement enable teams to quickly find more effective solutions to existing problems, improve expense management, and identify new opportunities to reduce costs.
New technologies applied to purchases and supplies effectively allow expenditure management to be structured and flows to be monitored in a centralized medium. Not only does it facilitate the execution of the purchasing process, but also provides relevant information in real time to better analyze expenses. Thanks to a Purchasing Information System, you can know which departments order the most goods and know if they respect their budgets well.
Formerly perceived as an essentially administrative activity, which consists in placing orders with suppliers, the purchasing function has now evolved into a more strategic role thanks to its higher analytical capacities and its strength of proposal. The buyer has become a major player who contributes to improving the performance of the company.
The technologies e-Procurement offer procurement functions great strategic opportunities. Thanks to real-time data analysis, they allow them to best adjust their decisions and strategies and to anticipate their evolution.
E-Procurement also allows purchasing teams to obtain better operational performance. By automating tasks, it allows them to be more efficient by eliminating redundant and time-consuming tasks. Thanks to this, they can focus on tasks with higher added value. Among the operations that can be automated with the solutions E purchases, we mention the processing of invoices, the validation of purchase requests, the monitoring of supplier contracts, etc. By reducing human intervention in the purchasing process, e-purchasing software also makes it possible to reduce errors that can be very expensive.
The introduction of technology into the function purchasing and procurement allows you to create a system that standardizes workflows and procedures. Apart from the fact that data and information are easier and faster to access, transactions are also automated. This ensures that orders are placed with the correct supplier and that none of them are made outside of contract.
E-Procurement is thus a great growth driver for the purchasing department. Thanks to it, buyers gain in agility and efficiency. Are you ready to digitalize your procurement department? Adopt Sourcing Force, a comprehensive Procure-to-Pay solution that automates your purchasing processes.
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