Using an eProcurement system can give you an advantage in the supply chain and help you get more competitive pricing from suppliers, as well as some other benefits. Discover how to evaluate different software programs to get the best one.
A rundown
eProcurement is the process of buying and selling services on the internet. It breaks down the barriers of manual processes by digitizing them. The main benefits are:
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Savings on purchased goods and services.
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Reduced internal costs for purchasing.
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Faster purchasing cycle times.
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Streamlined and closer relationships with suppliers.
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Improved supplier management.
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Centralized data repository.
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Vastly improved reporting capability and savings tracking and validation.
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Better inventory control through system-imposed purchasing limits.
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Better transparency across all your procurement processes.
All of these lead to better job pricing, timely job completions and more successful bids. Plus, your finance function will work much better with your procurement team with the increased transparency and credibility of savings!
Procurement has advanced greatly in the past 20 years. Capabilities have grown from a relatively simple platform for conducting sourcing exercises over email to cloud-based, fully integrated suites of sourcing, requisitioning, purchasing, invoice review and payment, and inventory management capabilities.
There is no “one-size-fits-all solution.” The solution you select must be tailored to your HVAC company’s needs. Adding features adds costs and complexity as you go up the ladder, so if you do not choose correctly, you could even add cost and time to your operation!
Here is how to properly select the right eProcurement solution.
1. Create a list of needs and wants
Separate the “must-have” functions from “nice-to-have” ones. Each feature has a price tag, in both acquisition and operating costs. In addition, more extensive capabilities mean:
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More interconnections with your existing systems.
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More implementation complexity.
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Longer implementation schedules.
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Higher implementation costs.
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Longer learning curves for users.
In many cases involving complex implementations, third-party consultants come at a cost, and robust project management teams must run the project. Numerous functions including IT, finance and procurement are involved, consuming internal resources too.
The bottom line is this: How much time, effort, money, staff resources and risk can your company afford? If you are a small or mid-sized business, this question is particularly crucial.
Some questions to ask yourself include:
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What is the current state of your procurement operation?
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Do you have documented processes in place?
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Are you using technology to leverage procurement?
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Can you reliably quantify the savings from your procurement efforts?
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Do you have a network of approved suppliers?
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Do you have a central repository for all procurement data – purchase history, suppliers and pricing?
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Can you easily track and prove savings?
If the answer to any of these is no, then your most pressing need is an eProcurement platform to execute your sourcing and purchasing efforts. You also need to create a central data repository and reporting capability to build a foundation.
In regards to payments in particular:
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Do you have effective invoice payment processes? Are they documented?
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Can you track the time to payment?
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Can you readily perform a 3-point match between PO, invoice and shipping receipt?
If you answered no to any of these questions, you may want to consider integrating invoice review, approval and accounts payable into your procurement process, depending on the severity of issues.
Lastly, in regards to inventory control, do you frequently run into shortages or oversupply situations? Both can be costly. Many eProcurement platforms feature order limits to mitigate these problems.
2. Understand how e-Procurement fits
No matter how good a potential solution may be, if it does not work with your existing processes and models, you will not get the most use out of it. Ask yourself:
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What software and systems do you already have in place that you will have to integrate? Examples are PO, A/P and general ledger.
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Is the work complex or simple?
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Is there a risk of or need for downtime?
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Does the eProcurement provider have previous success with those systems?
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Do you need third-party help? Again, there is a cost here in both time and money.
3. Look at the supplier network
Ready-made networks of suppliers with pre-negotiated discounts can be a tremendous value and allow you to hit the ground running. Essentially, you can bypass the sourcing process as well as the time and staffing resource costs. Be sure to:
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Review the suppliers in the network to ensure that they provide the goods and services you need.
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Check pricing compared to what you are paying, along with shipping costs and lead times.
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Look at the total cost, not just the unit cost.
4. Look for mobile compatibility
As a contractor, your workforce is probably dispersed across the country, so mobile capabilities are important to ensure better project execution. Your technicians in the field need to order parts and supplies quickly, with local delivery. They must be able to do so without going through central procurement via email or phone.
One way to tie locations together is peer-to-peer technology. This is a system architecture in which all the network computers can access each other’s files and computing power (also known as distributed computing).
Unlike client-server architecture, which uses a more powerful computer to hold all files for access by other computers in the network, peer-to-peer is not dependent on any one server. It is also not prone to that single server becoming overloaded.
The result? Better, more reliable response time. It is also generally less costly because expensive servers are not required.
However, one drawback is its vulnerability to hacking and malware, so be sure to use state-of-the-art security software.
6. Ensure ease of use
As a final comment on eProcurement selection, there is one more question that is last but definitely not least. What is the simplest solution for your buyers to use?
No system is effective without compliance. And if your system is difficult for buyers to use, they will not use it!
No compliance means no savings, and that means a wasted investment. As a smaller company, you cannot waste money. So, keep it simple!
The Raiven solution
Raiven Marketplace provides this simplicity in a user-friendly eProcurement solution. With Raiven (formerly Qmerit), you do not need to toggle between different websites to get to approved suppliers.
We can load your approved suppliers into Marketplace. You could also take advantage of our extensive list of negotiated supplier deals enabled by our alliance with Avendra, a leader in procurement programs and supply chain management. Get easy access to deep discounts between 7-25% without the time and cost of procurement initiatives.
It is important to note that this is not a procure to pay solution. Marketplace is a standalone, cloud-based, AI-enabled eProcurement platform. You order through Raiven Marketplace and pay the suppliers directly, and the suppliers ship to you.
There is no lengthy or costly integration with your systems. Users can easily order from approved supply contracts, and with our revolutionary Raiven browser extension, we provide “digital guard rails” that steer you away from non-approved suppliers. So, compliance is easy, and no more rogue spending!
If you hire a lot of subcontractors, Raiven contract management platform lets you track your subcontractors' performance over time, so it enables easy compliance too. You can track valid credentials, like licenses and forms, and if any are expired, users cannot book jobs with them.
In closing, selecting the right eProcurement solution can be a tough job, and implementing it can be costly if you do not keep it simple. Look to Raiven for the simplicity you need!
For more information, contact us today.
