1. The eProcurement Business Case
Spend Solutions Ltd
www.spendsolutions.co.uk

2. Problem map for eProcurement
Control, Analysis and Reporting of Spend
Reasons companies embark on an eProcurement program
 Need to control spend – who buys from where and whom.
 Contracts may be in place but maverick spend persists
 Current buying tool not user friendly – easier to buy outside of system than within
 Commodity and Financial approval flow linked to better budget control
 Empowerment of staff giving ownership of spend management.
 Payment compliance – late payments to suppliers, missed opportunities for prompt
payment discounts. More expensive borrowing as CCJ’s impact credit rating.
 Paper hungry and inefficient /slow purchase to pay processes.
 CIPS circa up to £70 per PO (paper based system)
 ‘Out of office’ situations delays buying of goods and services – operational inefficiencies
 Failure to leverage buying power –
 lack of product standardisation
 unnecessarily high unit purchase costs
 Identifies wider opportunities for strategic sourcing
 Lack of spend management information – suppliers often best source of information
 Reputational damage
 Reliance on suppliers
 Increased switching costs

3. Return on Investment
• Transactional Returns
• Strategic Sourcing Returns

4. ROI for eProcurement
Transactional return
▫ Transactional Hard Savings
 Spend is managed and controlled through financial and commodity
approval flows – easier to order within system than outside
 PO’s only placed with approved vendors for approved goods and services
 Staff redeployed to other value added tasks
 Less staff required to conduct buying and invoices processes
 Consolidation of payment teams
 Corporate spend visibility and improved Management Information
▫ Transactional Soft Savings
 Improved end to end process times
 Reduced inventory levels as time delays for PO process reduced
 Increased service levels
 Manufacturing reduced production down time due to in efficient
buying.
 Data exported into vendor ERP – error elimination
 Service industries less slack time associated with inefficient buying
process

5. ROI for eProcurement
Strategic Sourcing return
 Strategic Sourcing Hard Savings
 Reduced purchase costs associated with elimination or reduction in
maverick spend
 Management information – Purchasing to negotiate better deals and
identify strategic sourcing opportunities
 Leverage early or later payment opportunities and payment methods
 Strategic Sourcing Soft Savings
 Reputational ( and litigation ) damage from late payment
 Leverage ERP integration

6. Benefits from eProcurement
 User (Internal) friendly buying tool
 Empowerment of users to order goods and services
 Management Information
 Improved budgetary control
 Financial and activity based information as well as valuable information for
Purchasing.

7. Benefits from eProcurement
 User (Internal) friendly buying tool
 Empowerment of users to order goods and services
 Management Information
 Improved budgetary control
 Financial and activity based information as well as valuable information for
Purchasing.

8. Considerations
 Change management is fundamental
 Supplier management
 e-catalogues
 Punch out sites
 Strong project management and leadership
 Willingness to challenge status quo
 Empowerment – not everyone can accept
 Many major blue chips have deployed !